Share

In the second part of our five-part series on investments, we’ll discuss the best time to invest and whether there really is a ‘right’ or ‘wrong’ time for it. In the last post, we touched upon the concept of compounding, which is almost like magic. Gains get reinvested, earning more gains and so on, kicking off a cycle of earning. At some point, you can just sit back and let your investments do all the work for you! There’s a catch, though. It takes years for compounded gains to add up to any substantial amount. This is where starting early makes a difference, since the same sum will earn you more if it’s invested earlier.

LET’S LOOK AT A BASIC EXAMPLE OF THIS CONCEPT:

Nishi opens a 10-year recurring deposit account that offers 8% interest per annum, compounded quarterly. By putting in as little as Rs. 500 every month, Nishi earns almost Rs. 32,000 in interest and receives just under Rs. 92,000 upon maturity:

Here’s another example to consider: Shalini receives a cheque for Rs. 10,000 as a gift on her 20th birthday. Instead of spending this money or stashing it in her savings account, she invests in a 10-year fixed deposit that offers 8% interest per annum, compounded quarterly. By her 30th birthday, this FD will have more than doubled in value, earning over Rs. 12,000 in interest:

If the same amount had been invested five years later, Shalini would have earned less than Rs. 5,000 in interest by the time she turns 30. The only difference in these two scenarios is the amount of time her money has had to grow. This is just the tip of the iceberg.

Imagine what happens over two or three decades, with investments that offer even higher rates of return. So, the answer to the question ‘when should you invest?’ is NOW. Don’t wait any longer. Yesterday would have been better, but it’s never too late (or too early) to start investing. Put your money to work right away!

other blogs

Smart Money October 5, 2022

10 Demons To Kill This Dussehra

Dusshera is one of the major Hindu festivals that also symbolizes the end of Navratri. The festival is celebrated as the victory of Lord Rama over Ravana. It also marks the triumph of Goddess Durga over the demon Mahishasura.  So this festival symbolizes killing demons or destroying negative and bad habits we have in our […]

By Team LXME
Share
Smart Money September 27, 2022

Hacks to plan for a budget-friendly vacation!

In today’s world, everyone’s life is full of adventure, so there needs to be some relaxation along with fun in life. So, in order to release all day-to-day stress, one needs a break from their daily routine to refresh our mind. One such time is when Raj and Simran decided they needed a break from […]

By Team LXME
Share
Smart Money September 6, 2022

How To Invest & Build In Emergency Funds

Radhika: I am facing financial stress as there is a sudden unfortunate medical emergency. Apurva: Didn’t you have any emergency funds for such a crisis? Radhika: No! What do you mean by the emergency fund? You know what, I  had to dig out money from my long-term investments. I am worried about how to tackle […]

By Team LXME
Share