Equity investments - What is the Right Age to Start Investing in Equities?

Equity investments - What is the Right Age to Start Investing in Equities?

by Nutan Gupta Last Updated: Dec 15, 2022 - 09:55 am 230.3k Views
Listen icon

An individual invests in the share market in order to earn profit. However, a lot of people still don’t know the right time to start trading on equity market. As the saying goes, ‘The early bird catches the worm’, similarly in equity markets, the one who starts investing at an early age earns more return as compared to a person who starts investing after him.

Investment Planning for a person who wants to retire at the age of 60
Age 25 (Mr. A) 35 (Mr. B)
Years left for retirement 35 25
Assumed Rate of Return 10% 10%
Monthly Investment Rs 5,000 Rs 10,000
Total Investment Value Rs 1.7 crore Rs 1.2 crore

In the above example, Mr. A starts investing at the age of 25 while Mr. B starts investing at the age of 35. Though Mr. B invests double the amount i.e. Rs 10,000, by the time both of them reach the age of 60, the total investment value of Mr. A is more than the investment value of Mr. B. This is because Mr. A stayed invested for a longer period of time and the power of compounding worked for him, though he invested a lower amount of money than Mr. B.

As years pass by, the value of your money decreases as inflation eats into a lot of your savings. Banks provide an interest rate of 4% on the savings account, and with an inflation rate of 7%, the value of your money goes down with every passing year. When you invest money in the equity market for a longer period of time, the money compounds every year, thereby giving you more returns.

The bottom line is that one should start equity investments at an early age so that you can get the benefit of compounding.

How do you rate this blog?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage


About the Author

Enjoy 0%* Brokerage with 5paisa
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Market Outlook for 23 April 2024

Nifty started the week on a positive note above 22300 mark. The index consolidated within a range throughout the day and ended around its day’s high above 22350 with gains of a percent. Nifty Today:

Market Outlook for 22 April 2024

Our markets corrected sharply in the week gone by mainly due to uncertainty over global geopolitical tensions and selling by the FIIs which resulted in the index breaking the 22000 mark. However, we witnessed recovery from the low of 21780 in the last trading session and Nifty ended around 22150 with a weekly loss of over one and a half percent.

Stock in Action - Escorts Kubota Ltd

Escorts Kubota Stock Movement of Day