Investing in your 20s: The gift you can give your future self
This article explains the foundational concepts of investing, highlights the long-term benefits of compounding, and provides a practical roadmap to begin investing with confidence.
Published on 9 January 2026
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3 min read
If you’re in your 20s, you might be starting your first job, managing student loans, adjusting to city life or trying to balance weekend fun with weekday responsibilities. When you’re busy, investing can feel like something to figure out later, once your bank balance feels more stable.
That’s a mistake, because time is one of your biggest financial advantages. When you’re young, your money has plenty of runway to grow, re-grow and grow again. You don’t need a large income to begin; the most important thing is simply to get started.
Let’s break down the basics
That’s a mistake, because time is one of your biggest financial advantages. When you’re young, your money has plenty of runway to grow, re-grow and grow again. You don’t need a large income to begin; the most important thing is simply to get started.
Let’s break down the basics
What does investing mean?
Investing is a way to put your money to work. Instead of waiting to invest more, you can start investing smaller amounts in products such as mutual funds. These can help your money grow over time, building wealth and getting you closer to your investment objectives.
It’s about letting compounding work its magic.
It’s about letting compounding work its magic.
So, what is compounding?
• If you started investing ₹5,000 a month at 25 with a 12% annual return, by 55, you could be sitting on ₹1 crore+.
• Start investing the same amount at 35, with the same return, and you would only have around ₹38 lakh by the time you are 55.
Ten years of delay could cost you over ₹60 lakh.
The above example is for illustrative purpose only.
That’s the power of compounding and the financial penalty for waiting.
• Start investing the same amount at 35, with the same return, and you would only have around ₹38 lakh by the time you are 55.
Ten years of delay could cost you over ₹60 lakh.
The above example is for illustrative purpose only.
That’s the power of compounding and the financial penalty for waiting.
Don’t know where to start? Here’s a simple roadmap to get started in your 20s:
Do-it-yourself investing, puts you in direct control. You choose your own stocks or funds and decide when to buy or sell. With the rise of online platforms and low-cost brokers in India, DIY investing is more accessible than ever.
Step 1: Build an emergency fund
Before diving into investing, create a financial safety net by building an emergency fund. Aim to set aside three to six months’ worth of essential expenses in a highly liquid and low-risk option, such as a liquid fund or short-term debt investment, so you can access it quickly if needed.
Life is unpredictable job losses, medical emergencies or urgent repairs can come out of nowhere. An emergency fund helps you handle unexpected situations without derailing your long-term investment objectives.
Life is unpredictable job losses, medical emergencies or urgent repairs can come out of nowhere. An emergency fund helps you handle unexpected situations without derailing your long-term investment objectives.
Step 2: Know your ‘why’
Are you putting money aside for an MBA, a dream trip, a down payment on a home or retirement? Identifying specific goals helps guide your investment choices. It’s also perfectly OK if your goal is simply to grow your wealth over time, for example, aiming to have a certain amount in five, 10 or 20 years. Wanting financial freedom or a larger safety net is a valid reason to invest.
Step 3: Understand your risk profile
Would a 10% dip (for example) in your portfolio give you sleepless nights? Or are you fine with volatility if the long-term rewards are high? Your tolerance defines your investment mix.
For short-term goals, it’s generally better to choose safer investment options that prioritise capital preservation. For long-term goals, you can afford to take on more risk for the chance of yielding high returns.
For short-term goals, it’s generally better to choose safer investment options that prioritise capital preservation. For long-term goals, you can afford to take on more risk for the chance of yielding high returns.
Step 4: Get advice that’s designed for you
There’s noise everywhere friends, family and influencers. An easy way to start through is to stick to SEBI-Registered Investment Advisers (RIAs) who has fiduciary responsibility to act in your best interest. They will work with you to create an investment plan personalised to your objectives, investment horizon and risk tolerance.
Step 5: Practise discipline and be consistent
Investing isn’t about timing the market perfectly, it’s about showing up regularly. Consistent contributions, even if they are small, can harness the power of compounding and turn regular efforts into significant wealth over time.
Bottom line: Shift your mindset for efficiently growing your wealth
It’s never too early to start. Having an investment plan in place, which helps you stay on track by saving and investing at a level you can afford, will help you build financial security that your future self will thank you for.
Disclaimer: This article is for educational purposes only.
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