Fundamental Rules of Investing
There are three fundamental rules of investments:
Example - Raj started investing money to the tune of ₹5,000 per month diligently. He began this discipline at the age of 22. He was earning a rate of interest of 12% compounded each year. While his friend, Amrita started investing money to the tune of ₹10,000 per month. She was also doing this very religiously. She also earned 12% compounded. She started the process of doing the investments month on month, at the age of 30. What is the total investment adding up to at the age of 50 years of age?
Therefore, it is very important to start investing early. The earlier, the better for your investments. But before you start investing your money, you need to save a portion of your income that can be used to make investments. So we will discuss the concept of savings, also its pros and cons in the subsequent units. As you can see from the table the cost of waiting / delaying for Amrita is ₹37,63,806. Raj benefited from eight more years of compounded growth than Amrita.