The Finance Nest

“I will start investing once I have a stable job.”

“I am still young; I still have time to start investing.”

“Isn’t investing risky right now?”

If you have these questions in mind, then you are not alone. Many believe that they need to wait for a ‘perfect’ time to start investing. Most of us are told to save and invest money, but few are taught to invest early to get the maximum out of it.

Did you know that investing ₹5000 monthly in any good mutual fund from the age of 25 can end up with ₹1 crore by the time you’re 55—without increasing your monthly investment?

Why start early? Let’s take an example of two individuals, X and Y. Both X and Y started investing Rs. ₹5000 in monthly SIP, and they planned to increase the investment by 5% every year. So the first 12 SIPs would be ₹5000, and then the next 12 SIPs would be ₹5250, and so on. However, X started his investment journey at the age of 25 and Y at the age of 35. Both of them have planned to invest till they reach the age of 60, and we assume a 12% annualized return on investment, which is lower than the 17% annualized return given by major mutual funds in the last 25 years.

Total investment by X would be ₹54,19,218 with an estimated gain of ₹3,76,98,355, and he would get a total value of ₹4,31,17,574.

Total investment by Y would be only ₹28,63,626 with an estimated gain of ₹95,50,616, and he would get the total value of ₹1,24,14,242.

By just starting 10 years early, X is able to generate almost ₹3.00 crores more and ensures a smooth retirement.

Let me show you this with the example of a one-time investment. Keeping all the conditions the same as above, we assume X and Y did a one-time investment of ₹10,00,000. What do you think their investment would look like when they hit the age of 60?

At the age of 60, X’s ₹10,00,000 one-time investment will grow to an estimated ₹5,27,99,620.

At the age of 60, Y’s ₹10,00,000 one-time investment will grow to an estimated ₹1,70,00,064.

Just see the difference of starting 10 years earlier. Here X is able to generate ₹3.57 crore more than Y.

There is a saying, ‘Time beats timing,’ so stop waiting for that ‘perfect’ time. It may cost you more than you think. The earlier you start, the better you get out of your investment, thanks to the power of compounding. Whether it’s SIP or a one-time investment, time is your biggest asset right now. Do not wait for stability or the right moment; start with what you have right now. Start today.