Top Four Reasons Why Investing is Important in Early 20s

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Top Four Reasons Why Investing is Important in Early 20s
23 Nov 2021
6 min read

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Why is investing important? The most important strategy to achieve one's financial goals is to make investments on time and wisely. As we are moving ahead in our lives, new financial goals and obligations keep emerging. It usually begins with a lifestyle need, transforming into the purchase of a car, later with the purchase of a home, better education for children, and may settle with the care of our loved ones with health and wellness needs. #ThinkWithNiche

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Every individual's pattern of investment is different as he or she looks at life differently. While some individuals think of investments in order to make simple profits, whereas for some it can refer to putting in time and effort for future benefits, such as improving one's financial wellness Know what is Personal Financial Management, and for some, it may just mean securing the future of loved ones.


We will define investments as "inducing capital into Financial Products Financial ServicesShare Market Meaning, Property Real Estate Investing, or any other business endeavor in the hope of making profits or a scalable future." Sometimes investing is frequently confused with savings; whereas it is not so, as investments are a more active manner of deploying your money for its growth, whereas savings is often viewed as holding a portion of your income without regard for where your surplus funds are deployed.


Higher Investment Returns are a tradeoff, as the investor foregoes the benefit of using the funds for his or her investment in exchange for a higher utility afterward. Let's Explore The Top Four Reasons Why Investing is Important in the Early 20s:


1. Dividends and Capital Gains are two methods to profit from Stock Investments What is Share Market? (High Gain, High Risk)


2. Investing in Government Bonds Know can provide assured recurring payouts and tax benefits over defined lock-in time periods. (Medium Gain, No Risk)
 

3. Rental Income What is it? capital gains can benefit an investor who invests in Real Estate. (High Gain, Low Risk)
 

4. Retirement Plan (Average Gains, Marginal Risk) What is it? The majority of individuals to safeguard their long-term sustainability invest in various recurring income which they can be assured as valued savings post their retirement and for the longer days of life (old-age). This is important as individuals may find it difficult to maintain one's lifestyle after retirement if one does not have one. This suggests that everyone should invest a portion of their earnings during their working years in order to have a nest egg when they retire.

Earlier employees used to be able to choose between a defined benefit and a defined contribution in various pension plans Definition when they worked for the government or private company.

Today we see most of the young individuals having a desire to retire early, therefore there is a high need to invest a bigger pie of their income to achieve their objectives of having a great retired life and that too without compromising their day-to-day lifestyle and their needs. This syndrome is often termed as the "FIRE" [Financial Independence, Retire Early], popular among Millennials (Also known as Generation Y or Gen Y) Who are they?


Saving a significant amount of one's salary from a young age (as much as 50% of one's income) can allow one to retire at the age of 40-45, rather than 60-65. The FIRE movement promotes a modest lifestyle while both investing and early retirement. This also helps overcome inflation, hence it is more and more a necessity to invest.

Let us be prepared for a better tomorrow, and embrace it.