While most of us think of investments as a late 20s decision, financial experts are of the opinion that making early investment will ease the load on your pocket in the long term.
You have just started earning and want to enjoy the newly found financial freedom. The word ‘Investment’ not only sounds like a responsibility that you are not ready for, also, it might be something that you have not much knowledge about. Retirement may seem ages away at this point of time. In addition, the array investment options might just confuse you. While it is difficult to save when you are in your 20s, it is undoubtedly the best time to get started.
As you grow up, you realize that financial priorities are gradually changing and the kind of dispensable income you had earlier is suddenly becoming less. This imbalance in life goals can be taken care of through early investing habits.
The earlier you begin, the greater the potential Return On Investment. The saying “the early bird gets the worm,” certainly applies to investing as well. There are numerous benefits to starting early. The first and foremost being that time is on your side. You have a longer period to save and invest than those who have late realizations.
To start with, understand the investment options, the amount you are comfortable setting aside and the purpose of this investment. Advanced technology and immense competition have made it possible for a 21 year old fresh graduate in the city to draw a six digit monthly salary. Yet, he has absolutely no clue of what to do with this kind of money. Chances are he will think of buying a car or a house and then either he will follow his peers or he will just let the amount be in his bank account. The word is ‘Inflation’ and you need to know about it.
All investment options vary in their returns for a reason. Find out about it. Research about the downside and risk associated with each one them. Eventually, the financial markets of the world will mature and your investment will multiply in number.
However, below mentioned are the most common modes that may build up your portfolio.
- Fixed Deposits: Banks provide this financial instrument which fetches the investor guaranteed higher return than a savings account could.
- Mutual Funds: Mutual funds can invest in stocks, bonds, cash and/or other assets. These combine to form one mutual fund, also called a portfolio which is professionally managed.
- Stock market: The volatile market that allows people to trade shares of publicly held companies. It allows the general public to benefit from the financial accomplishments of the companies whose shares they hold.
- Bonds: A debt investment in which money is lent to a corporate or government on which interest is received.
- Real Estate: People are generally of the opinion that investment in real estate comes with a heavy investment amount. This is really not the case anymore. With models like Land & Equity you can invest with an amount as low as Ksh 10,000. As population is growing on land which is becoming scarce, the price of land will always appreciate.
Do not hold back from investing because you do not have enough, simply start with making small investments and give them time to mature, as the saying goes “haba na haba hujaza kibaba”. However, do not jump into making a choice. Figure out the purpose for your investment, the returns and the time period you expect.
Invest now, thank yourself later.
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