Investing can be a lifelong journey for you & if you start early, you may able to benefit from it. Even if you start investing late in your life, it will still be a good start for you. Starting to invest early may not be easy especially if we have lesser cash in hand with lower income. But if you are able to start with a smaller amount & increase it as you have more income, you are able to benefit a lot from it.
Personally, I started early but I got myself into a huge amount of debt that I had to sell some of my asset & investment to pay off my debt. I even sold my mutual fund investment to fund my holiday. That was not a wise decision but after I paid off my debt, I started to invest again.
What Are The Benefits Of Investing Early?
1. Compounding Interest Is Key
This is one of the reasons why many people that start investing early earn money from investing. It is extremely powerful if you are investing in the long run. In another words, the earlier you invest, the better it is. One of the best examples that you can refer to is your current EPF or your parents EPF. With the forced saving & contribution by your company, the growth of your EPF saving account & the amount that you are getting when you are retired will be a lot. You can read more on the How Does The Power of Compounding Helps The Growth Of Your Money to have better understanding on compounding interest.
2. It Helps With Your Retirement Planning
Whether you plan to retire earlier or retire at retirement age, having extra sum of money aside from your EPF will definitely help. At the end of the day, is EPF really enough for our retirement? If no, your habit of investing early will help the growth of your money for your retirement.
3. The Earlier You Invest The Earlier Your Learn
It goes down to learning how to manage your investment portfolio & managing your risk. Investing can be easy & challenging at the same time. Having a Financial Planner to manage your investment portfolio is easier than managing your own. If you are managing your own portfolio, we may be prone to make some investment mistakes. Especially when you are young, you can afford to make mistake or take a bigger risk while learning from it.
4. You Are Ahead Of Everyone
The earlier you start, the more money you can potentially earn. Imagine this, on the 5th year of your investment & you found a dream house that you wanted to purchase. With the amount of money you have invested, you may potentially have the money to pay for the house deposit & renovation. Common things that happen in our country is, many people will keep money for their dream house. Instead of investing, they keep it in form of cash. That may be good, but if you are afraid of taking some risk, you may consider Fixed Deposit instead. At least it will help to beat inflation.
5. Dollar Cost Averaging
This is a common terminology that many of your Mutual Fund agents will use. I use Dollar Cost Averaging for my gold & PRS investment where I have invested the same amount of money regardless of the price. With Dollar Cost Averaging, you are able to obtain a better return in the long run as you are investing in good or bad market.
The hardest part of starting to invest early comes from learning how or what to invest & to put aside some of your money for investment. Especially for students or fresh grads, putting aside RM50-RM100 can be a challenge but…. it is not hard. You may try to save RM2-RM5 per day & end of the month, take all that money to invest. Or you can put aside RM100-RM200 when you received your monthly salary. It is not impossible unless you are not willing to try. Some may say that they will invest when they have more money or when they have salary increment but it will never happen. It will happen if you start now by having a plan on how to save that extra money for investment.