Remember the story about the hare who took a nap because he was so sure he could run faster than the tortoise and lost the race? Financial advisors say late starters will find it increasingly difficult with each advancing year to catch up with someone who started earlier. “People are often amazed when I show them how much a small amount invested early in life can yield,” says a financial advisor. “You would not have the same corpus even if you put in double or triple the amount of money as someone who started 10 years earlier.” Want to see it in concrete numbers? Let’s assume you start investing Rs 500 per month when you are 20, and go on investing for the next 40 years With an 8% annual return, you would have built a corpus of Rs 17.45 lakh by the time you are 60 years old. Now let’s assume you start in vesting at 30, and the amount is double, that is, Rs 1,000 per month. When you are 60, you would have only Rs 14.90 lakh. If you wait till age 40 to start investing, even if you put in Rs 2,500 per month for the next 20 years, you will have only Rs 14.72 lakh at age 60—not a very safe situation. And if you started the process merely five years before turning 60, with Rs 20,000 per month, you would build a corpus of only Rs 14.69 lakh.
(Source: Your Money, The Times of India, Mumbai 11th Sept 2007)
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