How investing early can make you rich?

Do you remember the famous dialogue from the Bollywood movie “Deewar” when Amitabh Bachchan says ”I have buildings, property, bank balance, house, car what do you have?” (Mere paas buildings hai, property hai, bank balance hai, ghar hai, gaadi hai tumhare paas kya hai?) Shashi Kapoor says “I have my Mother” (Mere paas maa hai)

So, let’s tweak the dialogue of Shashi Kapoor a bit and he replied that “I have time”.

What does he mean by “I have time”? It means he has time to invest, grow, and create wealth!!

We have often heard from our elders that “Money doesn’t grow on trees”. That’s true we need to earn and invest our money properly to become rich and create wealth. Here are 4 mantras that you need to follow with dedication:

Let’s look at an example of how you can create wealth by investing early:

Ms. Isha started off her working life journey at the age of 23. She earns  ₹.25,000 every month. Isha is well informed about the fact of early investing so she starts investing  ₹1000 every month at the rate of 14% in LXME Long Term Portfolio at 14% till her retirement. 

On the contrary, Ms. Ahana also started her working career at the age of 23 and she also earned the same salary as Isha every month but she started investing ₹1000 every month from the age of 33 at the rate of 14% as she wasn’t aware of early investing benefits. 

Then let’s find out how much wealth they will create by the age of 60 years.

	Ms. Isha	Ms. Ahana
Started investing at Age	23	33
Per month investment amount	₹1000	₹1000
Rate of Return	14%*	14%*
Investment Period	37 Years (60-23)	27 Years (60-33)
Corpus Accumulated	₹1,48,65,803	₹36,30,532

*These are targeted returns and mutual fund investments are subject to market risk. Read all scheme-related documents carefully.

As you can clearly see the difference between investing early & late and how compounding worked like magic for Isha. Isha was able to create ₹1,12,35,270 (₹1,48,65,803-₹36,30,532) more than Ahana. 

You can see how one can accumulate a corpus in crores by just investing ₹1000 consistently for a longer period of time.

Isha was able to create wealth by following the 4 mantras of starting early, being consistent, being patient, and staying invested.

Typically individuals, who have just started their journey in the working world have various desires as they have money in their hands. They crave buying new gadgets, cosmetics, branded purses, etc. to keep up with the trend.

In the initial working years earnings is less which makes an individual think they have a whole life to invest we will invest in later years let’s just enjoy our lives! Indeed! Enjoy your lives, although  along with allocating some of your income towards saving and investing.

While one is thinking about enjoying their life they are missing on their crucial years and when you have even lesser commitments and responsibilities, thus leaving more room for savings and investments where small investments can make miracles due to the power of compounding. 

“Little disciplines compounded over time make a huge difference.” ― Orrin Woodward

Benefits of early investing:

1. Even small investments can do miracles: 

If you start investing early i.e. right from the time you begin earning income, you can benefit and create wealth by just starting with small amounts like ₹100/₹500/₹1,000 and so on. Compounding effect like magic on your investments in the longer term. Even your regular investment of 500 can become lakhs over a period of time due to the power of compounding.

Want to start investing in small amounts? Check out the LXME Rs.100 Equity Fund, LXME Rs. 100 Debt Fund, and LXME Rs. Gold Savings Fund wherein you can start investing with just Rs.100.

2. You can save more: Investing early helps an individual in saving more as compared to an individual who starts investing in the later stages of life as they have lesser commitments at the beginning of their earning journey. This helps individuals to develop the habit of saving more and spending less.

3. Risk-taking Capacity: Compared to people who are mature in age or on the verge of retirement, young people have a higher risk tolerance.. 

Young investors have the capacity to bear losses as they have more time to recover those losses even if they incur short term. While investors who are at a mature stage cannot do the same as they don’t have that much time. So, invest in risky or equity instruments for the long term and earn inflation-beating returns.

You have passed your 20s or early years of life? Don’t worry, you can still build wealth, but you’ll need to start right away and invest a sizable amount of your income.

LXME is here to assist you in achieving your goals for beginning your journey and creating wealth for yourself.

Check out the Invest tab on the LXME app and look out for various goal-based portfolios which are diversified, well-researched, and curated by experts.

“The Compound Effect is the principle of reaping huge rewards from a series of small, smart choices” ― Darren Hardy