Time vs. Money: What Matters More?
Let’s compare two friends: Pawan and Satya (see image below). Both achieve a 12% XIRR on their investments, but they start at very different points in their lives. Pawan begins investing at age 25 with a monthly SIP of ₹25,000, while Satya starts much later, at age 50, investing ₹3 lakhs per month. Both increase their SIPs by 5% each year. Pawan invests for 35 years, while Satya invests for just 10 years.
Who Ends Up with More?
Surprisingly, Pawan ends up with a slightly higher corpus, ₹8.8 crore compared to Satya’s ₹8.26 crore. Despite investing much less each month, Pawan’s advantage lies in one crucial factor: TIME. Starting early, even with a smaller amount, allows the power of compounding to work in his favor.
It’s Not Just About the Numbers
This isn’t just a moral tale about when to start investing. The key takeaway is that early investing doesn’t just compute well mathematically; it also forms a habit. Treating a SIP like an EMI (Equated Monthly Installment) makes investing automatic and disciplined. That consistency is what drives long-term success.
Why Starting Late Is Tougher
Starting at age 50 can make forming this habit challenging, not because of the mathematics, but due to the mindset. Years of spending without regular savings create resistance to committing to a monthly SIP, even if the income allows for it. This illustrates why starting early not only benefits you financially but also helps develop beneficial behavior.
Build the Right Habits Early
The real advantage of early investing is the mental conditioning that comes with it. Making SIPs a natural part of your lifestyle, regardless of how small builds a powerful discipline. It’s less about timing the market and more about staying invested in the market over time.
What are your thoughts on this approach to long-term investing? Have you started building your own SIP habit? Share your views in the comments below! If you found this blog useful, don’t forget to SHARE it with your friends!
