Investing is a simple activity but needs to be done in a consistent and thoughtful manner. Many times, young people think that equity trading is as an activity which could be explored at a later stage of life when incomes tend to increase or as a tool to adventurous activity . However, this is not a prudent strategy as one tends to miss on a lot of time by delaying the investment process. The successful investing toolkit is built around understanding long term financial needs and provides an essential guide to achieve those goals in an effective manner. The basic knowledge and information needed to get started with stock investing could be availed by visiting the website of any good stock brokers in India. Let us explore how this fits in the scheme for young individuals and why it makes sense for them to start investing in equities right from an early age. Equity investment should be seen as a tool for future financial independence. The earlier you start investing the better it is. Financial literacy is a must to start this process.
Economic cycle: Equity trading is invariably linked to economic cycle and long term business trends. Over a period of time, the earnings of major listed companies in the stock markets tend to move up in tandem with the growth in the economy. This ensures that investment stories culminate in the earnest over a period of time. Entering in good quality equity investment at a younger age basically gives you the much required “time” in the market which ensures that “timing” the market is secondary thereby helping you ride over short term market volatility in an efficient manner.
Life stage investing: Life cycle investing basically means putting your funds in various assets based upon the needs and aspirations of the stage of life you are at. When you are young, the risk taking abilities are more and therefore it makes sense to invest earnings in the stock market which is perceived risky ( generally due to poor risk management and lack of discipline )compared to low return instruments like debt, fixed assets, Gold etc.
Limited responsibilities: Limited responsibilities in terms of family needs and other fixed expenses makes investing from an early age a suitable choice for deploying your funds judiciously. You can always change the investment mix by taking a periodic review and consulting with a good stock market advisory service to plug in the loopholes in your financial plan. The earlier you start, the more opportunities you get to shape up your investments in a balanced manner which will provide long term returns in line with your financial goals.
Disposable income: At an early age, when you are just starting with your career, there is normally more disposable income in hand which can be invested in equities. It will also inculcate proper saving habits and will likely provide you with an insight into how stock market investments can offer you effective returns over and above the risky free rates.
Prospects of increasing earnings: Since you are likely to see an increase in earnings at the early stage of your career, the overall deployment of investable funds can be done in a phased manner. This means that you can start equity investments with a small amount and increase it in due course of time as your income rises.
Equity investing is an activity with a very high regard to discipline. Equity investing from an early age helps you find the much needed patience and control to ensure long term wealth creation. So it makes sense to start investing in a small and measured manner. Getting an insight and understanding of equities which is the most profound financial asset class also leads to a better awareness of your long term financial goals and how to meet them in a timely manner. One must remember that a very small population of India is into financial savings and this is just the cusp of the booming equity cult in India and the youth must take calculative steps in order to participate in the financial boom coming in this country. Also Read: Why Investing is Important for Every Individual