When you are in your 20s and early 30s, you have the biggest asset to your credit -- time.
By starting to invest during the early stages of your career, you get a lot of time to research, learn, and achieve, advises Ayan Nagpal.
It's quite flattering if you have to kick off small; but it is to your advantage to start investing early.
Most often people tend to invest late in their 40s and 50s. However, young investors think differently.
Since they are tech savvy and capable, they study investments with an open mind and are flexible to change their strategies with time as they acquire more knowledge from their success and failure.
Traditionally savings are considered as a well planned, calculated investment. However, saving money can't be considered as a sole reason or purpose of investment.
Alternatives such as mutual funds, crypto currency have opened new doors for investors alongside real estate.
Before making any investment you have to evaluate the following factors:
1. Conceptualisation and planning: Do you have your finances under control?
2. Value addition: Is it adding any value to my present or future?
3. Ease of transaction: The process and timeline of investment and returns.
4. Trust and commitment: Are you aware of the risks, terms and conditions?
While real estate comes with its fair share of risks, if you plan it right and have the right resources, owning a home is often more profitable than renting one.
The value of real estate investment can be considerably increased by following a slow and steady profit approach.
Here are some tips to help you make a smart investment:
1. Make an effort to purchase and sell
You can buy a low-cost foreclosure home or invest in a property that needs minor repairs, spend a certain amount of money improving it, and then resell it for a better price.
If it's a large space in a prime location, you can even keep a part of the house for yourself to stay and rent out a portion for extra income.
2. Admiration of value
While renting it out may seem like a convenient option, do not forget that rent amounts also inflate with time.
When you are young and have low-key liabilities, if you are able to identify and invest in a potential space, you will notice how your investment will soar as you retire.
Unlike other investments, property is a tangible asset that can be leveraged according to one's needs.
3. Consistent riches Or cash flow
An average real estate owner generates nearly about 6% or greater cash flow in a year.
This is the net income you receive from a real estate investment after all your expenses are covered.
4. Tax Benefits
The government offers tax breaks for property depreciation, insurance, maintenance and repair expenses, legal fees etc.
Real estate investors are at advantage of getting lower tax rates for their long term investments .
Even REITS (Real estate investment trusts) offer potential investors a way to invest in real estate without having to own, operate, or finance properties.
When you are in your 20s and early 30s, you have the biggest asset to your credit -- time.
By starting to invest during the early stages of your career, you get a lot of time to research, learn, and achieve.
At this juncture, nothing can stop you.
Even if you make mistakes, the impact would be minimal as you will have the time to correct it and reap benefits.
5. Advantage of loans
When you are young, you can afford to take a debt and build a dream.
You also get a lot of time to pay off your loans, unlike someone in their 40s or 50s.
Remember, as you grow older and your source of income and remuneration multiplies, you will be able to pay off loans faster than you intended to.
For example, if you take a Rs 10 lakh loan to invest in your early 30s, you will have 30+ years to repay your loans. But as you advance in your career, you may be able to foreclose the loan in less than 10 years.
There are several benefits of investing early. You can use your knowledge of technology to target and network with the right people to build and sustain your investments.
Remember the sooner you sow today, the faster you shall reap with good returns.
With timely investment planning, you can retire early and can tick off your bucket list by exploring the world, trying out new cuisine and everything else you'd dreamed of without having to worry about having a roof above your head.
Ayan Nagpal is the founder of Agrocorp Landbase (P) Ltd, real estate trade firm.
