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© Provided by The Financial Express Note that it is important to start investing as early as possible so you can benefit from the power of compounding.

Saving and investing from early on can help you a long way. However, first-time investors need to have a proper understanding before jumping right into it. One of the main reasons for earning higher returns on your investments is to start early and let the money grow over time. For instance, a difference of just 5 years in the tenure of your investments could make a huge impact, and the investment amount could double.

Atul Shinghal, Founder and CEO, Scripbox, says, “It is always suggested to start early and develop the habit of saving and investing-be it small or large-in a planned way.”

Having said that, the spending and saving behavior differs from person to person – while some overspend with their financial independence, some become more responsible and start saving and investing early. Experts say, first-time investors should understand this, and then work towards their goals.

To start with, Atul of Scripbox says, “One should make sure that he/she is saving 25 to 35 per cent of his/her monthly income. With this one can effectively allocate monthly investments across his/her goals.” Even if you find it difficult to save this much, experts say it is important to start channeling savings into investments towards your goals.

You can start by making a small investment, for instance for an emergency fund. Atul of Scripbox says, “It is an investment that will provide you with financial support in case of a job loss or medical crisis. You can park this money in liquid funds that ensure that money is accessible enough but also grows at a steady rate.” Mutual funds, in general, allows starting with an investment of as low as Rs 500 to Rs 1,000. Hence, you can look at mutual funds to build your emergency corpus.

Note that it is important to start investing as early as possible so you can benefit from the power of compounding. For instance, if you invest Rs 2,000 per month for 25 years at an interest rate of 12 per cent, you will get a corpus of Rs 38 lakhs approx. at the end of the tenure. But if you invest the same amount for 30 years at the same interest rate, you would get a corpus of Rs 70.6 lakhs approx.

Once you have an emergency fund in place, experts say you can start investing in other financial goals in debt and equity mutual funds. Atul of Scripbox says, “Note that, your asset allocation will guide you in determining the kind of risk you hold in your portfolio and the direction you want it to move, given your short and long-term goals.”

Essentially, for long-term financial goals, experts suggest growth assets like equity which create wealth if you remain invested for long periods, and short-term goals are best served by stable return products which are flexible and low risk.