Investing Early: How time can be your greatest ally in securing your financial future
You put in hundreds of hours of work each year to earn most of your money. But when you have savings and invest your funds in the right places, your money starts to work for you.
Over time, you’ll need to work less and less, as your money works more and more, and eventually you might be able to stop working altogether. Over the years it is observed that small investments usually get neglected over the belief that, to start investing you need to have a large sum of money.
Do you also think it is really worth saving small amounts? If your answer is yes then read on further to know how important it is to start investing small amounts regularly.
You believe investing a small sum regularly will not help you to meet your ambitious long-term goals. That is why you may avoid investing indefinitely. You will be surprised to know how small savings could benefit you in the long term.
Let us take an example,
Consider two periods, your future saving scenario looks like this
Given the above scenario, imagine two cases;
So, if you invested small savings for 10 years you will have saved 7.2 lacs at least in the end. Well, that is a huge amount in case of any unforeseen events, this might come as big help. Also, this will give a nice feeling and boost confidence. To develop the habit of savings & to start investing early, may seem simple to have monthly savings but is easier said than done.
Starting to save early puts time on your side.
The habit of saving is difficult to achieve, it requires discipline and a certain amount of sacrifice. When you learn to save small, it makes it easier to make future savings.
Small savings might not look big enough at the start, but over a period of time, they compound well and add to your long-term wealth creation.
Let us see how the power of compounding helps money grow over a period of time. Your savings will add up and the longer your funds are working, the longer the power of compound interest will work in your favor.
Our investments after 25 years would be Rs. 1,36,08,656. Interesting! Isn’t it?
Case I, where you had small savings compounded at a higher amount than Case II, where you had no small savings. The above example tells us that if you don’t start saving small chunks of money just because you feel it will not be worth it, it’s not the right way of looking at it, because, in your long-term investment plan, it’ll surely help in boosting the wealth you will create.
“A penny saved is worth more than a penny earned”. So do your future self a favor and start Investing. Hopefully, you’ll never need to use it, but if you do, you’ll be beyond grateful it’s there.
Start Investing Small — It helps you in building the habit of saving!