Regardless of where you choose to put your money - cash, stocks, bonds, or a combination of these - the key to saving for future is to make your money work for you. This is done through the power of compounding. Compounding investment earnings is what can make even small investments become larger given enough time. You are probably already familiar with the principle of compounding. Money you put into a bank account earns interest. Then you earn interest on the money you originally put in, plus on the interest you have accumulated. As the size of your account grows, you earn interest on a bigger and bigger pool of money. The table below shows two different examples.
How much would your money grow when you invest Rs.1,000 per month over a period of 10, 15, 20, 25, and 30 years.
How much would your money grow when you invest Rs.1,00,000 once over a period of 10, 15, 20, 25, and 30 years.
The real power of compounding comes with time. The earlier you start saving, the more your money can work for you. Look at it another way. To attain certain amount of corpus within a set period of time pro-active investment style is preferable. Thus, no matter how young you are, the sooner you begin saving for future, the better it is.