The Benefits of Investing Early

Updated: June 11, 2020

When I first started working and making my own money, it never occurred to me to invest my earnings. At best, I would just put a portion in my savings account and spend the rest however I want.

Looking back, if given the chance to relive those times, I would have chosen to allot another portion of my income to investing.

I used to consider investing as something that old people do – old people with lots of extra cash.

What I didn’t know back then, and what I realized a few years ago was that – it’s always better to invest as early as you can in your life.

To give you a simple illustration why, here’s a couple of scenarios that I came up with.

sunrise-invest-early

Scenario 1:

  • Juan sets aside P1,000 a month and puts it in an investment that earns 10% per annum.
  • After 5 years, Pedro begins investing P2,000 a month under the same instrument.

At the end of 10 years, here’s what will happen:

early-investing

You’ll see that by year 10, both Juan and Pedro have already invested the same amount, but the gross value of Juan’s investment is more than that of Pedro’s.

Here’s another and more convincing example why you should invest early.

Scenario 2:

  • Maria invests P1,000 a month in an instrument that earns 10% per annum. She stops after 4 years.
  • At that point, Rosa begins investing P1,000 a month on the same investment and continues to do it for the next 6 years.

These are the gross value of their investments after 10 years:

investing-early

Despite the fact that Rosa invested more money, Maria still has a larger investment value than her. And think how much more Maria would have if she didn’t stop investing.

I hope that these two scenarios made you realize that investing early has its clear financial advantages.

And more importantly, you’re never too young to start investing today.

Did you like this post? Then please share it to your friends.

Enter your email address for your free subscription to Ready To Be Rich:

———
Photo credit: matthewpaulson

35 comments

  1. this really helps, sir. i’ve been reading your posts and been practicing some of your advices. thanks

  2. […] The Benefits of Investing Early […]

  3. now i get the point.investing early is always better than investing late.thanks for clarifying. you really are helping a lot of people realize or learn a lot of things about personal finance. thanks and keep it up! 🙂

  4. Good post and illustration Sir Fitz! (Good to be back) This is the reason why investing at a young age is a wiser thing to do. More power to you and the readers!

  5. […] The Benefits of Investing Early […]

  6. […] The Benefits of Investing Early […]

  7. […] The Benefits of Investing Early […]

  8. […] The Benefits of Investing Early […]

  9. Kuya Fitz, can you cite investment instruments that can earn us 10% per annum like the ones you mentioned?

  10. […] The Benefits of Investing Early […]

  11. and what type of investment that yield to 10% per annum. I wonder.? If you could enlight me on this.
    financial investment really gives lower returns.. like.. o.o10%

  12. thank you for your blog. it is really useful especially to aspiring investors like me.

    i am searching the web for some time now and i still cannot find blog or site that can enlighten me about the “compounding” method of some investment funds, with that, can you share to us sir what are the investment funds and companies who offer compound interest to the investment of their investor?

    i am realy keen to invest in funds that can compound my investment. because i am really looking for a long term investment for my retirement.

    thank you in advance.

  13. Thanks sir Fitz, a very straight to the point and precise explanation 🙂
    Now I am more excited to build my ef so I can do investing.
    Btw, is it better to read about investing now while I still am building my ef po?
    Or just fully learn and search about it pag ready na ef?

    Thanks a lot po!

  14. Yes, Rafael John. Study about it while building your EF, so by the time you’re ready financially, you already have an investment plan, and can immediately execute.

  15. There is an old, but tried and true saying, and that is, “You are right on the money,” but one thing most people will miss and that is, “Invest something, tell no one about it, don’t talk about it, just do it…”, because time is a friend and friends waste time, so keep your mouth shut, don’t brag, and just invest something, now, and add to it…As time goes by, soon you will need supplemental income for your retirement and you will not have it, because time did indeed go by

  16. Very informative illustration, if i could only go back time and started early. But, wala pa naman kasi akong knowledge sa personal finance nung nag start ako mag work. I might be Pedro , cause i start late, but im glad that i have started already. Thanks for this

Leave a Reply

Your email address will not be published. Required fields are marked *