2 min read.Updated: 15 Oct 2020, 01:58 PM ISTAvneet Kaur
We have assumed three investors who started investing ₹5,000 on a monthly basis at different ages
Every investor is investing towards his retirement till the age of 58
A few years delay in making your first investment can cost you a few crores. It is for this reason that most financial experts advice to start investing as soon as you start working. You need not start with a huge investment. Even a small sum of a few thousands every month can make a big difference to your corpus in the long run. We have worked some simple calculations here to show the opportunity loss if you delay investing a small sum of ₹5,000 every month by five years or so. Well, you will be stunned to know that if you start five years late, you would accumulate ₹1 crore lesser by the time you reach your goal. Here are some more numbers to thrill you.
We have assumed three investors who started investing ₹5,000 on a monthly basis at different ages. Every investor is investing towards his retirement till the age of 58.
Jack started investing at a young age of 23, as soon as he got his first salary. He started investing ₹5,000 every month and at an assumed annualised rate of return of 11% p.a, by the time he will reach his retirement, he will have ₹2.64 crore towards his retirement kitty.
His friend Jamie started investing at an age of 28 on advise of Jack. He also started with the same amount of ₹5,000 per month. Assuming his investments will also fetch him similar returns, he would accumulate a crore less..!!! His retirement corpus would be ₹1.40 crore when he will turn 58.
Just when Jamie started investing, one of his colleague, Vishal also started with him. He was 33 years old then. He started investing the same amount per month. His corpus at 11% rate of return would be close to ₹79 lakh.
So, considering ₹5,000 monthly investment at 11% per annum, a five year delay in investing can cost ₹1 crore and a 10 year delay seems like a curse. Assuming same rate of return, a 10 year delay will cost you a whooping ₹1.67 crore.
We can also say that starting five years early can help you double your corpus and starting 10 years early can help you triple your corpus by the time you reach your retirement (long run).
This is a small illustration to tell you the importance of starting to invest as early as possible and experience the difference. You can start investing via SIP in mutual funds with an even smaller sum of a few hundreds.