You should get started with your investments as soon as possible. When it comes to investments, time is money. The sooner you get started, and longer you stay invested, the more returns you earn on your investments. Consider the following example. Suppose you start investing Rs 1 lakh a year from the time you turn 25 years old and continue to do so until you turn 58 years, along with your brother who is already 35 years old. Consider you both invest in a scheme which offers returns at 10% a year.
Let’s compare how your investments rack up against one another upon maturity:
Age | You start at the of age of 25 years | Your brother starts at the age of 35 years |
25 | Rs 1,10,000 |
|
26 | Rs 2,31,000 |
|
27….. | Rs 3,64,100 |
|
…..35 | Rs 20,38,428 | Rs 1,10,000 |
36 … | Rs 23,52,271 | Rs 2,31,000 |
… | .. | … |
… 56 | Rs 2,21,25,154 | Rs 78,54,302 |
57 | Rs 2,44,47,670 | Rs 87,49,733 |
58 | Rs 2,70,02,437 | Rs 97,34,706 |
As you can see from the table above, the difference is huge. You earn way more than your brother because you started early. Your brother’s investment horizon is shorter by ten years. You unleashed the power of compounding to the fullest, while your brother didn’t. Hence, the sooner you start investing, the better.
