For investing, timing is the key. Just as the brain develops in early life, paving the way for all future learning and development, similarly, planning and investing should start at an early age to give a good support and foundation to the life structure.

The power of compounding says that investing early vs. investing late can have a huge impact on our wealth creation. Money grows at an exponential rate when earning interest on itself. Smaller amounts invested earlier than larger ones, yield larger returns over time.  

Generally said, the more time you have, there is more room to start with aggressive investment options like equities. A young aged person is willing to make more risks and as such take advantage by investing in equity assets such as general and blue chip equity shares, equity mutual funds and ELSS. It is said that equity class gives an average return of around 15% in the long run. Fixed income will gradually follow with age.  

For making good investments, one should start getting familiar with equity classes. Volatility cannot be avoided in stock markets, but it is not a deterring factor if one has knowledge and done research. Amateur investors might be taken aback by the occasional lows but in the long run, the cycle usually reverses. One should try to diversify investments in multiple companies as loss in one can be offset by profit in the other.    

If one doesn’t want to invest directly in markets, equity oriented mutual funds and ELSS is a good option. Growth option of equity mutual funds can be used to park money for long-term and it takes advantage of stock market cyclical movements. ELSS is same as equity mutual fund but with a 3 year lock in. Systematic Investment Plan wherein a fixed amount is invested every month is also a good avenue as it takes care of investing one’s regular income and considers market lows and highs.

Apart from this, our saving bank accounts should have a buffer amount for everyday use and emergencies, the rest should be invested in short term money market mutual fund schemes which offer higher returns and great liquidity otherwise inflation and taxes will erode their value in the long run.  

The investment portfolio should be complemented by making investments in fixed return products which provide safe and fixed returns, options are   Bank FDR, PPF, Post office MIS, NSC, etc.

Summing up, the investment plan should be made by analyzing the risk profile, time frame and financial goals. There is no single portfolio which will be applicable for all. Each investor will have individual requirements and objectives which will be taken into account while deciding the portfolio. So be an early mover, before you miss the opportunity.