The millennial generation faces particular financial concerns that can often feel overwhelming in today’s fast-paced and constantly changing environment. It is easy for young millennials to forget the value of investing in the rush to succeed in this fast-paced environment. Even if young adults are considering investing, the deluge of information available to them frequently leaves them perplexed and wondering where to begin and how.

Those with money or experience are not the only ones who can invest. In order to stay ahead of the curve and meet their financial needs, young adults who are just starting their professions should also begin investing early.

Here are 5 reasons why every millennial should start investing now –

The power of compounding: Long investment horizons provide the greatest opportunity to capitalize on the power of compounding. Because they have so much time on their hands, millennials may make the most of it by starting to invest early. Compounding will provide large returns even on small initial investments over an extended period of time, laying a strong financial foundation for future investments. Millennials can take advantage of compounding over a longer time horizon by starting early, which gives them the chance to see exponential growth on their investment.

Extended investment horizon: Given that millennials are primarily in their late 20s and early 30s, they have a lot of time to smooth out market fluctuations and take advantage of long-term investment opportunities. To put things into perspective, equities mutual funds have returned 16.30% over the past 25 years. This means that if you had invested Rs 1,00,000 25 years ago, your money would now be worth Rs 60.30 lakh, or a 60x rise (Ace MF, March 2023).

Inflation: According to RBI Internal Research (2023), the average inflation rate over a 20-year period is 5.5%. If your monthly expenses are Rs 40,000 now, in ten years they will be Rs 69,000, after twenty years they will be Rs 1.18 lakh, and after thirty years they will be Rs 2.02 lakh. It is critical to make sufficient investments to outpace inflation. All other asset classes are outperformed by equities mutual funds in terms of producing a high real rate of return.

For example, the real rate of return on gold is only 4.46%, whereas stock mutual funds yield returns of 10.18%. Even after accounting for the effect of taxes, fixed deposits would not even come close to beating inflation.

Low entrance barrier: Since millennials are still starting their careers, they may not have enough money to make large investments. Mutual funds, however, have a relatively low entrance barrier. Starting capital for investors is as low as Rs 500. Additionally, customers have the option to invest small amounts each month through SIP. As a result, even individuals with minimal resources can now invest. 

Satisfying financial needs: Investors might achieve financial fulfillment more quickly if they develop the habit of investing frequently and early. Investors can realize their dreams of launching a business, purchasing a home, or taking a global tour by amassing a sizeable portfolio. Additionally, millennials might arrange an early retirement to enjoy their senior years with loved ones.

In summary, millennials benefit greatly from early investment in terms of securing their financial future. Millennials may best leverage the power of compounding and beat inflation by starting early. Distributors of mutual funds are a good resource for millennials who are just starting to invest. A distributor can assist investors in selecting a mutual fund plan that best suits their needs by helping them match their financial goals with their risk tolerance. Millennials may secure a stable financial future by meeting their requirements for money on time.