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Investing

5 Reasons Why 20s Is the Best Time to Start Investing

Today, the youth is smart and savvy about how to earn more on their bank savings accounts. Banks now offer better interest, which provides higher returns when compared to the past. However, money lying idle in the bank is equivalent to losing the potential to earn more.

Importance of start investing at a young age

As a young adult in your 20s, you do not think about long-term financial goals, like children’s education and retirement. However, when you put your money in different investment products, you have the chance to earn higher returns and accumulate more wealth over the long-term.

By starting your investment journey at an early age, you can:

  1. Benefit from the compounding effect

The compounding effect occurs when you allow your returns on the initial investment to earn additional profits, which enables you to build a huge corpus in the longrun. If you do not want to take the risk of investing in mutual funds or equities, you may consider fixed deposits (FDs). These offer a guaranteed interest rate and are issued with a pre-specified maturity date.

  1. Assume more risks

When you are young, you have none or few responsibilities. This means you can invest in riskier instruments that offer the potential to earn higher returns. Additionally, you do not have to panic in case of adverse movements and liquidate your investments. Being young, you can wait and monitor to ensure that the markets improve to level out your returns. If you do not want to take risks, you can check your fixed deposit eligibility to open one today.

  1. Save on taxes

Often, in your 20s you may not have taken a home loan or invested in pension funds that offer tax benefits under Section 80C of the Income Tax Act, 1961. As per this section, an amount of INR 1.5 lakh is eligible for tax benefits. An excellent way to reduce your liability is a tax-savings fixed deposit investment.

  1. Save for future uncertainty

The coronavirus (COVID-19) pandemic has shown that life is unpredictable. When you invest in your 20s, you safeguard your financial future in case of loss of income due to adversity.

  1. Meet financial goals

You may have various objectives like getting married, taking a dream vacation with your spouse, and buying your home. With financial discipline and regular investments, you can build a corpus that can help you fulfil these goals at various stages of life.

Banks and leading non-banking finance companies (NBFCs) offer several fixed deposits benefits. Take control and start investing today.

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