What you gain with early mutual fund investment?

When it comes to mutual funds, the time matters more than the timing. The sooner you start, the greater will be your returns. Similarly, the more you invest, the higher the benefits. The length of your investment period will make a big difference to your final earnings from the schemes.

• Secure your future

This may not be on the top of the list to invest in mutual funds in India. However, securing your future is actually important in many ways. Being prepared to face any of the unexpected financial difficulties will give you the strength to handle a crisis without putting yourself or your family under heavy debt. There are various investment options you can choose to invest in. Mutual funds happen to be a better option than others are. Experiment with your investments, re-calculate, and adjust the portfolio percentages as the years go by. Starting sooner will give you an advantage of testing the market and even becoming a pro at managing your funds.

• The power of compound interest

When money is invested in an equity fund, the principal amount will return. The longer the duration of the scheme, the returns will include additional money apart from the principal amount. The compounding gains momentum as the years roll by and result in greater returns for longer periods. The earlier you begin with your investments, the more time you will have to multiply the returns.

• Higher risk capacity

As a younger person, you will have a higher capacity to handle the risk of the volatile markets. You can make up the difference amount by waiting for an additional year or so later on. Also, with lesser responsibilities at a young age, you can invest more money during the initial years.

• Manage debt and insurance alongside

Investing in mutual funds in India alone will not be enough. In our lives, we will need loans for various purposes (education, housing, etc.,) and insure our lives as well. With long-term investments, you can adjust your debt payments and insurance premiums by pausing your mutual fund investments for a while. The gap can be covered after a few years as time is on your side.

• Tax benefits

Mutual fund investments along with insurance premium payments and other loan repayments get tax deductions of a maximum of Rs. 1.5 lacs under Section 80C. Instead of paying tax, you can invest the money for your future.

• Facing crisis

The volatile markets are a risk for investors. There is no denying that starting early will help you assess the highs and lows. If your investment suffers due to a crash, you will still have time to think and reanalyze the situation. Do you want to continue investing in the same schemes, or do you want to reconstruct your portfolio?

The flexibility of adjusting your investments is greater when you start early. Investing early will teach you financial discipline and keep your spending in check.