Introduction
Your 20s are the best time to start investing. Even small investments made early can grow significantly over time, thanks to the power of compounding. Yet, many young adults delay investing, thinking they need a large amount of money or extensive financial knowledge. The truth is, getting started is easier than you think.
Why You Should Start Investing Early
Starting in your 20s offers several advantages:
- More Time to Grow: Compounding interest works best over long periods.
- Higher Risk Tolerance: Younger investors can afford to take on more risk.
- Learning Curve: Mistakes early on are less costly and more educational.
- Financial Discipline: Investing early builds good money habits.
1. Start with a Budget
Before you invest, understand your income and expenses. Track your spending and set aside a portion of your income—ideally 20%—for saving and investing.
2. Build an Emergency Fund
Before putting money into the stock market, ensure you have an emergency fund covering 3–6 months of living expenses. This provides security and avoids selling investments during emergencies.
3. Invest in SIPs (Systematic Investment Plans)
SIPs allow you to invest a fixed amount regularly in mutual funds. They are perfect for beginners because they:
- Require low initial investment
- Encourage discipline
- Reduce market timing risk
Start with an equity or balanced mutual fund suited to your goals.
4. Consider Index Funds
Index funds are a passive, low-cost way to get broad exposure to the stock market. They’re ideal for new investors who don’t want to actively manage a portfolio.
Benefits include:
- Lower expense ratios
- Market-matching returns
- Easy diversification
5. Learn About PPF and NPS
Government-backed investment schemes like the Public Provident Fund (PPF) and National Pension System (NPS) offer stable, long-term returns with tax benefits.
- PPF: Great for long-term, tax-free growth
- NPS: Suitable for retirement planning
6. Avoid High-Risk Shortcuts
Stay away from get-rich-quick schemes, penny stocks, or blindly following trends. Focus on long-term wealth building with diversified, trusted assets.
7. Invest in Yourself
Courses, certifications, or skills that boost your earning potential are also investments. Upskilling in your 20s can lead to better income and more opportunities to invest.
8. Use Investing Apps
Several user-friendly investing apps now make it easier to start small, automate SIPs, and monitor your portfolio. Some popular ones include:
- Zerodha Coin
- Groww
- Kuvera
- Upstox
Final Thoughts
Investing in your 20s is not about how much you can invest, but how consistently you do it. Start small, stay informed, and stick to your plan. The habits and decisions you make now can lead to financial independence much earlier than you expect.
