Starting Early Really Pays Off Big:
Recall the rule of 72, which can be used to calculate the number of years it would take for a lump-sum investment to double. A 9 percent rate of return doubles an investment every eight years. Waiting eight years to begin saving results in the loss of one doubling. Unfortunately, it is the last doubling that is lost, as illustrated in Table below. In that example, Rs 48,000 (Rs 96,000 -Rs 48,000) is lost due to a hesitancy to invest Rs 3,000.
This is a tremendous opportunity cost for waiting eight years to start. The gains are awesome when you start early and make regular, continuing investments instead of delaying.
Starting to save Rs 3,000 eight years earlier (age 23 instead of 31) earns the investor an extra Rs 48,000 (Rs 96,000 –Rs 48,000) assuming a compound growth rate of 9 percent.
Income Does Not Create Wealth:
People do not get wealthy by earning an income. Real wealth comes from increases in the value of assets over time such as the growth of investments within a provident fund or a pension plan like NPS. [/responsivevoice]
| Starting Earlier | Starting Later | ||
| Age | Value | Age | Value |
| 23 | 3,000 | 23 | 0 |
| 31 | 6,000 | 31 | 3,000 |
| 39 | 1,2000 | 39 | 6,000 |
| 47 | 24,000 | 47 | 12,000 |
| 55 | 48,000 | 55 | 24,000 |
| 63 | 96,000 | 63 | 48,000 |
