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It is natural to want to splurge when you begin to earn, but early investing in SIP can really build up a corpus for your future.
“Keep calm and shop on…” is my advice to my nieces.
I have 4 nieces, all in different and exciting stages of their lives. What’s common between them is their determination to do something with their life. Two of them have started working and are in the early stages of their career.
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As is typical with young earners today, a lot of their salary goes towards shopping. Bags, shoes, clothes, cosmetics, movies, parties, … it’s an endless list.
That’s the fun of this age isn’t it? Just finished studies, bagged a good job, decent salary, and sales all year around on the various online shopping portals! So yes, they should be shopping and partying — after all they have earned it!
At this point, I am reminded of what the biggest investment guru of our times, who is also one of the richest men in the world, Warren Buffet said. “Do not save what is left after spending, but spend what is left after saving.”
He must have made this comment at least 25-30 years ago. But this golden advice is timeless; it will hold good 100 years later as well. And what’s more significant to note is that the value of this advice only increases with your age. As you grow older, it’s more imperative to consciously save first and then spend.
For someone in their early twenties, this may seem like such boring and staid advice, but believe me the beginning of your adulthood is the best age to start investments. In fact Warren Buffet said in one of the interviews, “I made my first investment at the age of 11; I was wasting my life up until then.”
So this might be a bit radical to most of us, but the point that I am trying to make is that the earlier you start investing, the more you stand to gain. Time is that magical ingredient you have that can create wonders with the investment that you hold for long. No wonder they say ‘Time is precious’.
And the best part is that you don’t need big money to start investing in equities, even a small amount of Rs. 5000 every month can do the trick. After a couple of years of working, believe me this amount will seem small. At that time you can increase the amount.
The terminology used for this is Systematic Investment Plan (SIP). However in the context of our discussion, I would like to call it as Systematic Investment Purchase!
What’s more, with companies offering these investment purchase options online, it’s almost like online shopping now. You decide the amount, decide the fund (if unaware, use a financial advisor’s help), go online and make your purchase. That’s it. Simple.
Once you have registered the purchase, the amount gets debited from your bank account every month. This way, you can be part of the various buying opportunities, read SALES, that the equities market offers without really tracking it and without taking big risks.
So now I want to tweak my advice to my niece and say – “Keep calm and shop on…, however make SIP the first item in your shopping list!”
Published earlier here.
Image source: woman with small savings by Shutterstock.
I have been in the finance and investment field for the last 15 years. I
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