5 investment, financial planning questions answered for millennials
Here are 5 important investment questions and their answers for millennials.
Why do I need to start saving for retirement so early?
Among several other reasons to suggest saving for retirement early in life, possibly the one that could gel well with youngsters is that the amount required will be considerably less compared to making a delayed start. By starting to save early for your retirement you will benefit from the power of compounding. Why don't you sample this: Rs 10,000 per month saved for 20 years would grow to roughly Rs 1 crore (assuming a 12% CAGR). In 30 years, the accumulated amount would be closer to Rs 3.5 crore.
And don't forget the 30:30 rule of retirement. 30 years of earning period feed the 30 years of the non-earning period. This is because with increasing life expectancy, the non-earning period in an individual's life is increasing and one needs to make provision for it as early as possible.
Is there any risk in not investing in equities?
Every asset class such as equity or debt and for that matter, any investment will have its share of risks. Even in the safest of investments backed by a sovereign guarantee, the risk is that of losing the purchasing power on the income earned. Whether equities or non-equities, one needs to understand the nature of the risk and its impact on one's earnings before linking it to a specific goal in life. Otherwise choosing a non-equity asset class for every goal may not be fruitful.
Even though the returns from equities are prone to volatility, with proper reviewing of the performance, the impact reduces over time. Studies in the past have shown that equities, as compared to other assets, have the potential to deliver higher inflation-adjusted returns over the
