Entering your 20s is an exhilarating phase of life. You’re full of ambition, dreams, and energy to conquer the world. It’s also a crucial time to lay the foundation for your financial future. Many young adults wonder where they should invest their hard-earned money to achieve their long-term goals. In this blog, we will explore investment options, financial planning, and why it’s essential to invest wisely, especially during your 20s.
Let’s start with a fundamental question: why should you invest? Understanding the “why” is crucial because it forms the basis of your financial journey. While the desire to become a millionaire or achieve financial independence is a common motivation, let’s look deeper into the concept of wealth and how you can truly build it.
Picture this: You’re in your early 20s, just starting your career, and you set a goal to earn one crore rupees. You meticulously plan how you will spend that money on a dream car, an expensive watch, exotic travel, and more. However, there’s a critical aspect that often goes unnoticed during such planning – taxes. When you earn money, you have to pay taxes, and the more you earn, the more you owe. It’s an inevitable reality of financial life.
Now, consider this scenario: You earn one crore rupees from a business venture, but you’ve already earmarked that entire sum for spending. You indulge in luxurious purchases, take lavish vacations, and enjoy the thrill of spending. Life seems perfect until an unexpected turn of events, such as a downturn in the economy (as we’ve seen with the COVID-19 pandemic), affects your business. Suddenly, your income takes a hit, and you’re left with financial insecurity.
This example underscores the importance of financial planning and wise investing. It’s not enough to aspire to become a millionaire if you’re not equipped to handle financial setbacks or secure your long-term future.
To truly become a millionaire, you need to be a millionaire who doesn’t just flaunt wealth but possesses financial security. That means you have enough wealth and investments to support your lifestyle without depleting your assets. You should aim to be the millionaire who doesn’t just talk the talk but walks the walk when it comes to financial stability.
Now, if you’re still reading, you’re likely interested in becoming that real millionaire. You understand that it’s not about accumulating wealth to spend recklessly but about securing your financial future. Let’s explore how to embark on this journey and the best investment options, particularly in the context of India.
In India, when it comes to investments, one asset class consistently stands out as the best – land. Land has long been recognized as a secure and appreciating investment in India. Let’s look into the “why” and “how” of investing in land, let’s address a common question: “I’m in my 20s; can I even consider investing in land?”
The answer is yes but with a twist. While you may not have the financial capacity to buy land immediately, it’s crucial to understand the long-term vision. Investing in land is not a short-term endeavor; it’s a strategic move for your financial future. You may not purchase land right away, but you can begin planning for it now.
Consider India’s rapidly growing population and urbanization. As cities expand and towns develop, the demand for land increases exponentially. The land is a finite resource, and as more people seek homes and commercial spaces, its value continues to increase.
Now, you might be thinking, “But how can I invest in land when I can’t afford it now?” The answer lies in setting clear financial goals. Start by saving a portion of your income regularly. Even if it’s a modest amount, consistent savings will accumulate over time. As your financial capacity grows, you can explore investment opportunities in land, particularly in regions that show promise for future growth.
It’s essential to adopt a long-term perspective when investing in land. Consider this investment as a gift to your future self and your future family. Think of it as a legacy that can secure your financial well-being for generations to come.
While land is an attractive investment option, it’s essential to diversify your portfolio for a well-rounded financial strategy. In addition to land, consider exploring other avenues such as stocks and mutual funds. These investments offer liquidity and potential for growth.
The stock market, in particular, has the potential to generate substantial returns over the long term. As a young investor, you have the advantage of time on your side. Compound interest can work wonders when you invest early and consistently. While the stock market can be volatile in the short term, it tends to trend upward over extended periods.
To begin investing in stocks, you’ll need to open a Demat account and start building a diversified portfolio. It’s wise to research and invest in companies with strong fundamentals and growth potential. Keep in mind that the stock market requires a deep understanding of the financial markets, so continuous learning is key.
Mutual funds are another viable option for young investors. These professionally managed funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets. Mutual funds provide a level of diversification that can reduce risk while still offering the potential for significant returns.
Now, let’s address the importance of patience and discipline in your investment journey. The path to becoming a real millionaire is not a sprint but a marathon. Avoid the temptation to liquidate your investments for short-term gains, like purchasing luxury items. Instead, focus on building and preserving wealth for the long term.
A real millionaire is someone who has the financial stability to withstand economic downturns, pursue opportunities when they arise, and secure a comfortable future for their family. It’s about becoming a wise steward of your wealth, not just a lavish spender.
To achieve this, you must imbibe the values of financial discipline, budgeting, and responsible spending. While it may seem tempting to splurge on the latest gadgets, designer clothing, or extravagant vacations, remind yourself of your long-term goals. Every rupee saved and invested today is a step closer to securing your financial future.
Consider setting aside a portion of your income for investments and automating the process. Automation ensures that you consistently save and invest without the temptation to overspend. Over time, the power of compounding will work in your favor, and your investments will grow exponentially.
As you progress in your career and your income increases, resist the urge to inflate your lifestyle to match your earnings. Instead, prioritize saving and investing for your future. Delaying gratification today can lead to substantial rewards tomorrow.
Now, let’s revisit the idea of investing in land. While it may seem like a distant goal, it’s worth exploring how you can gradually work toward this investment. Start by researching regions or areas that show promise for future development and growth. Keep an eye on property prices in those areas and monitor your savings.
Consider creating a dedicated “land fund” within your financial portfolio. Allocate a portion of your savings toward this fund, with the understanding that it will be used for land investments in the future. As your financial capacity grows, you can take proactive steps to purchase land when the opportunity arises.
Additionally, explores government schemes and incentives that may make land ownership more accessible for young investors. Some states in India offer subsidies or discounts to encourage land ownership among young professionals.
In the world of finance and investments, there’s a sentiment echoed by many seasoned investors—a moment of validation when you receive those coveted dividend notification emails. It’s like a gentle pat on the back, a sign that you’re on the right track. It signifies that you’ve become a successful investor. But the question arises: can you begin your investment journey with land, or is it possible to start with shares? The answer is a resounding “yes.” You can indeed start your investment journey with shares. So, what exactly are shares? When you purchase shares of a company, you are essentially buying a piece of that company. As the business thrives, profits flow, and if your share in that company grows, the value of your shares will increase as well. This translates into long-term profits. Shares offer a dual benefit: appreciation in their value and dividends.
I’ve invested significantly in this company’s shares, and the email informed me that I would receive dividends. The company’s board has decided to distribute dividends to its shareholders. It’s a rewarding feeling to receive such notifications, and when you start receiving them from multiple companies, it reinforces the idea that you’ve made smart investments. Your portfolio is growing, your share prices are rising, and you’re receiving dividends, which is akin to rental income—a form of passive income.
But, is it limited to Indian companies alone? Absolutely not. You can diversify your investments by considering opportunities beyond India’s borders, such as investing in US stocks. Why US stocks, you ask? Let me illustrate with an example. You’re currently watching this blog on YouTube, and YouTube belongs to Google. You believe that YouTube and Google will continue to prosper. So, can you invest in Google shares? The answer is yes. Google’s parent company is Alphabet, and you can invest in Alphabet shares. However the process of buying US stocks can be unfamiliar to some. Not all platforms offer this capability. This blog is sponsored by IND Money, a platform that allows you to invest in US stocks. Let’s dive into a live demo.
I click on the “Invest” tab, and you’ll notice that there’s zero commission for US stocks. You can easily access US stock listings. Remember our example with Google? Here, you can see the stock price of Alphabet. It’s gone from $1,400 to $2,450 in a year—an impressive increase. If you believe Google’s stock will continue to perform well, you can invest here. One significant advantage of investing in US stocks is the ability to purchase fractional shares. In India, you usually have to buy a whole stock, but in the US, you can invest with just a fraction of the stock’s price. This accessibility makes US stocks an attractive option.
Suppose you only want to invest $1 or even $0.01. Can you do that? Yes, you can. Let’s say you invest $100. You’d be able to acquire 0.04 shares, which are fractional shares. The US stock market is open, and you can make your investment decisions as you see fit. IND Money is a trusted platform for investing in US stocks, and it’s semi-regulated. It employs Bishop Fox, a security measure, and 26 of the top 100 Fortune companies rely on Bishop Fox—a Microsoft-certified entity. For US stock investments, IND Money has partnered with Drive Wealth, a company regulated by FINRA. If you’re interested in investing in US stocks, you can confidently choose IND Money. You’ll find the link to IND Money in the description and comment section for easy access to their application.
Now, let’s shift our focus to another investment avenue—gold. Many people consider investing in gold due to its reputation as a safe asset that helps protect against inflation. Investing in gold can preserve your wealth, ensuring that your money retains its value over time. Gold’s price tends to increase over the long term, making it a reliable investment option. You have several choices when it comes to investing in gold. You can opt for government gold bonds, which offer additional benefits, or you can choose physical gold, such as jewelry. The decision ultimately depends on your goals and preferences.
When it comes to jewelry, some people buy it not just as an investment but also as a way to display their wealth. While jewelry serves a dual purpose, it’s important to note that its value appreciates over time. Let me share a personal experience. I traveled to Dubai with a friend, and while he spent his money on gadgets, I chose to invest in a gold chain within my budget. Over time, the value of that gold chain has more than doubled, while the gadgets my friend purchased have depreciated significantly in value. The lesson here is that if you want to invest in gold and appreciate its aesthetic appeal, buying jewelry can be a wise choice. It not only protects against inflation but can also yield substantial returns.
Now, let’s discuss fixed deposits (FDs) and recurring deposits (RDs), two traditional investment options offered by banks. FDs involve depositing a lump sum amount, and you earn interest on this deposit. It’s considered a safe investment. However, the returns on FDs may not be as lucrative as those from other investment avenues. RDs, on the other hand, allow you to regularly deposit a fixed amount, which accumulates over time. While RDs provide a sense of discipline and forced savings, the interest rates are often lower compared to other investment options.
This brings us to equity investments, which offer the potential for higher returns. If you’re just starting out or looking for a more conservative approach, mutual funds are an excellent choice. They allow you to pool your funds with other investors and are managed by professional fund managers. Systematic Investment Plans (SIPs) in mutual funds provide a disciplined way to invest regularly. While FDs and RDs are safe but offer limited returns, mutual funds can provide a balance between safety and growth.
Finally, let’s explore what I consider the jackpot investment—investing in yourself. If you’re in your 20s, this is the most crucial investment you can make. Your future earning potential depends largely on your skills and knowledge. Investing in yourself can yield returns that far surpass any other form of investment. It’s a proven fact that successful people attribute much of their success to continual self-improvement.
Investing in yourself means honing your skills, gaining knowledge, and constantly seeking self-improvement opportunities. Whether it’s through courses, books, or other learning materials, each investment in yourself can pay dividends in the form of increased earning potential. The returns on this investment can easily surpass 200 times or more.
Your journey toward financial success should encompass a diverse range of investments. From shares and US stocks to gold, FDs, RDs, and mutual funds, each option offers unique advantages and suits different financial goals. However, the most rewarding investment you can make is in yourself. As you grow your skills and knowledge, your earning potential will skyrocket, setting you on the path to financial prosperity. So, as you embark on your investment journey, remember to allocate some resources to invest in your own growth and development. After all, becoming self-made is the ultimate goal.