If we assume that you retire at 50 and you have started investing a percentage of your savings from the age of 20, how will this affect the wealth that you accommodate until retirement? Let’s go over a scenario wherein you don’t invest your savings and they don’t grow. Let’s call this scenario A.
Assume savings to be 1,000 $ per year. In a career spanning 30 years, you will accommodate 30,000 $ worth of savings.
Now let’s go over Scenario B wherein you invest your savings in an investment option that offers 10% interest per annum. ( compound interest – as offered by stocks, provident funds etc.)
If you invest 1000$ every year in stocks at 10 % interest per annum, at the end of 30 years you will have accommodated 198,392.83$ ie. almost 7 times the total amount you invested and also 7 times greater than if you didn’t invest at all (Scenario A). And even if you made just a one-time investment of 1000$, in 30 years you would still end up with 17,449$ ie. 17 times the amount you invested.
With these kinds of results, it would be a crime not to start investing as early as possible. And remember, the more number of years you invest – the more and faster your money grows.