You hear many people tell you that when you are young you can take more risk.

Let me explain this better.

When you are young (say 22-35 years of age) you start investing small amounts in equity mutual funds. Let us say you started doing a SIP when you were 24 years of age with a princely sum of Rs. 2000. By the time YOU reached 30 years of age the SIP amount has say increased to Rs. 30,000 per month and it reached Rs. 50k per month when you are 35 (your current age). This is not a bad amount – especially if you are paying an EMI for a house / car etc.

Can you afford to put all this money in equities and equity oriented debt funds like Hdfc Prudence? The answer is yes, especially if you have a Provident fund – and there is a pf deduction also from her salary. You are still only about 70-80% in equity.

Suppose at this stage the market falls say 20% will it not hurt you? Of course it will. It will hurt badly. HOWEVER IN A GOOD PORTFOLIO IT IS NOT THE VOLATILITY THAT HURTS, it is the permanent dimmunition in capital – like buying ADAG’s Reliance Power – bought at 465 and now selling at Rs. 45….

So the younger you are, the LESS WORRIED YOU SHOULD BE of volatility. Permanent loss of capital, inflation, not being able to meet goals, ….these are the risks that you should be worrying about.

If you are worried about a temporary jerk in the market, go and read your risk chapters again….


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  1. Exacly my story
    I started with 2k per month sip, then increased to 3k then 9k 10k by 30 it was 30k and now iam 35 and investing 55k.

  2. While my father had a stock portfolio as I was growing up, there was no proper knowledge of regular investing. Any investment into the market was haphazard and driven by the hottest news/sector/company. Its only now, in the last 3-4 years that I’ve begun investing on a regular basis for the long term (thanks to subra, among others).

  3. How about this:

    I started with 4K at 24, increased regularly and am currently putting 12K into SIPs and I’m 30. Is that good enough for now since I do plan to keep increasing as income hopefully goes up.

    Sometimes I feel the monthly numbers mentioned here are on a higher side – example, 50K for a 30 yr old along with home loan sounds really really tough, even for a guy earning fairly well.

    Your guidance, Subra?

  4. For me it is simple way. To be a Warren Buffet,I should start investing for long term as Small companies that start in single room becomes giants like Infy, Justdial.

    And to reap the benefit in my life time I should start young 😉

  5. Yes, though I totally agree with the gist of this article, I found the numbers in SIP amount high as well. At the age of 35, even if you are earning well (and in my case spouse is earning too), I still struggle to put 25000 in SIP per month. As age increases, some expenses also get added as you start family, parents are no longer earning and apart from day today expenses you have expenses like Property Tax, School fees, Insurance, Annual Holiday,Kids’ birthdays that thow you off the track even if we have to pay for them once in a year.

    Subra need your guidence on how to manage such yearly expenses too.
    Is there a better way than starting RD for each of them (which I am doing currently).

  6. look when I put numbers it is on the basis of the people I deal with. It is the principle that matters. As long as you think you are investing to the best of your ability, feel free to invest more or less. These are broad ball park figures and I know a few kids who are doing better than this….and of course many who are not doing as well. Also if there is pregnancy, or some other reason why one income stops….equations could change..

  7. Thank you Subra for your quick reply.
    However I would still like to know the best way to finance the regular yearly expenses.
    Is RD the way to go or there are better options like Liquid Funds.

    Could you please write a post or if a post already exists, provide the link here.

    Sorry for the questions however I have just started learning the personal finance fundamentals.

  8. Spot on Mr.Subra,

    During 2008, every corner of India was buzz with reliance Power, and TV ads were full of India Power. They were targeting the retired officials who put in all their life saving because they it was hyped as it will double on listing day.

    These oldies forget basic rules of risk, and paid for it

    Thanks Again for the nice article

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