Should You Start Your Investing Journey At 21 Years Old?

Compounding is the holy grail of investing. It’s the reason you get so many returns on your invested money.

Generally, you would hear statements like if you had invested from 21 years old, then you would have gotten exponential returns.

And that is true. But by that logic, you should keep your money invested for 100 years to get 1000 crores in return and then see it rot because you will not be around or healthy enough to enjoy the returns.

So what should you do? Let’s figure it out…

Save and Grow Money

Typically, when you are starting out, try to focus on learning and aim to increase your earnings. This way, you can have more money from your income in the early years than from investing.

Save some money, and spend some money on your desires. Because you are young, you can afford to go on tight budgets and still explore and enjoy your life. You will learn a lot by doing this rather than saving this money for compounding.

For the next 5 to 10 years, be hyper-focused on enjoying life, supporting family members, growing your skills and growing your income.

This should be your plan till 30 years of age.

Learn The Basics

If you have done this, you would be comfortably sitting on an income of Rs 1 lakh per month and some savings and have travelled and enjoyed your 20s. These experiences will be something you will remember fora lifetime.

Now, your company might have a pension plan in which some money would be automatically getting deducted. So your pension is sorted.

Focus on other things like marriage, child education, health, unexpected expenses, travelling leisurely or anything else. For such things, you need to invest money depending on your goal and spend the money when you reach that amount.

Life isn’t just accumulating wealth; it’s spending money to live your life.

Sit Back And Relax

If you have done everything like the above, then you will get a yearly increment, which will increase your investment amount. You will keep splurging on your desires, knowing that your pensions and goals are covered.

And as and when your goals get hit, you will withdraw the money and enjoy. For example, if you plan to spend 5 lakhs rupees on a leisure vacation, then start a 15,000 rupees SIP in PPF, and you will have around 13 lakh rupees in the sixth year, and you could withdraw your 5 lakhs for travel, and the remaining can be kept for another travel after 7 to 8 years.

Where you invest depends on your risk profile, the stage of life you are in and also the goal.

If your goal is short-term, then you can’t invest in risky assets, or if you are retiring, then you can’t gamble on risky assets.

You choose where to invest and how much you are comfortable, and your only goal should be to earn more money - the rest of everything will be taken care of.