Investment
Investment
Why Investing important at early age
Investing early in life is importantbecause of the power of compounding. The greatest mathematical discovery wasmade by Albert Einstein and it states that “compound interest is the eighthwonder of the world”. This means that someone who starts saving at a young agebenefits from compounded interest, or money earned on top of money alreadyinvested.
The powerof compounding is the greatest mathematical discovery of the world, accordingto Albert Einstein. When you invest early in your life, you get a head start onsaving for retirement and other goals.
This question explores the power of compounding, wherein the money youinvest and the yearly interest you earn on it is reinvested along with anadditional contribution if any from time to time. In thelong term, investment in a mutual fund works to make your money grow by earninginterest on your initial investment and on all of the interest you earn fromreinvesting it. The number of years you invest for becomes very important wheninvesting in a mutual fund. Thus, the duration for which a person investsbecomes very important when it comes to earning higher returns. This ispractically possible if you start investing early because the power ofcompounding proves to be fruitful that way.
Age is notjust another number when it comes to investing. Taking a decision to startinvesting at an early stage of your life, say in your twenties gives youexceptional advantages in the form of time and ability to tackle or overcome the investmentrisks that might persist at a later stage. Investor’s age has a considerableimpact on the amount of risk he or she can withstand. As time goes by, peoplebecome more conservative with their investments and begin to shy away fromrisks. It is better to start investing early in order to have enough money forinvestments that you may need later on in life.
