Time value in investing

Time is of the essence in almost every activity of life and investing is no exception to this. This is a key ingredient

in the long term investment returns, and something an investor should understand. Starting early is very important

to reap the benefits of compounding as much as possible. Just think about your own career in terms of the knowledge

and the earning power when you started working in the field that you’re in at present compared to your current capabilities

and the earning power associated with it. I’m pretty sure most of us have experienced some degree of compounding 

in our career progression, and nevertheless that ability is sure to decline for most of us eventually with competition,

inflation, occupational disruption and several other factors. This same phenomenon in investing works out even better

if you start off early, have some patience and of course not giving much importance to the headline chatter.

 

A simple example of this fact is that an individual who invests $10,000 per year at a 10% annual return from ages 30 to 36

(a total investment of $70,000) will actually end up with slightly more at age 65 (about $1.5 million) than someone who

waited until age 37 to invest the same amount and continues to invest until age 65 (a total investment of $290,000).

See the difference here, 70k invested 7 years early has the same effect as investing 290k assuming similar rates of growth.

 

To finish you first have to start…….