It’s never too early to start investing!

Responsibilities are like leaves on a tree, the more the tree grows the more leaves it gets. When we were kids, we would have had hardly any responsibilities or let’s.
As the time passes by and we grew older and become independent, with branches we get our leaves too.Therefore now is the time you need to now ask yourself some questions.

  • Are you ready to take on these responsibilities?
  • Are you well prepared or armed enough to successfully take care of those responsibilities?In this phase of life we somehow conveniently ignore the importance of savings. Most of us think that it is too early to start thinking of investing… So if you haven’t, then my friend you are already late. Through this article we intend to not just help you understand the importance of investing but also show you that it doesn’t take much effort to plan it prudently.

Remember the rule 1. Of investing – One should start investing the day you get your first pay cheque.

3 steps to start investing

1. Determine your financial goals
2. Do your financial planning
3. Decide your asset allocation

1.Determine your financial goals
Every investment has to link with a financial goal. May it be further studies you wish to pursue abroad or your marriage or your retirement. The tenure of your goal will determine which asset class you will invest you’re hard earned money. If your financial goal is short term than you will ideally have to invest in debt schemes which tend to have considerably low risk. However if your financial goal is long term then you will ideally have to invest in equity, as equities tend to give higher returns with higher risk over a long term period.

2. Do your financial planning 
Before starting any investments, it is always advisable to have a plan in place. A proper plan will help you look at investments with a long term view. You need to invest with a financial plan in mind that will help you fulfill your future needs. An investment plan will also help you determine your risk appetite. Your risk appetite will decide which investment option you need to opt for. Generally, at your age the risk appetite is more as you have less responsibility. It is therefore advised to invest more share of your money in equities through mutual funds.

3. Decide your asset allocation
Like breathing is for living, asset allocation is for investments. Yup, it’s that important.

The importance of asset allocation is such that it eventually determines if you would be able to fulfill your financial goals. Asset Allocation will help you divide your investments among the different asset classes in a way that makes sense for them. In fact, the right asset allocation can help you maintain your confidence through economic ups and downs and may even increase your potential for better returns over time. Keep in mind that neither diversification nor asset allocation ensures a profit or guarantees against loss.

So, take time out and give your investments priority. It is also very important for you to understand the risk that is involved in investing, including the risk of loss and does not ensure profit. Moreover, while we would generally say ‘It’s never too late to start investing’ for you my friend we would rather say ‘It’s never too early to start investing’. To clearly understand the risks associated with each investment option they can consult a financial advisor.

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