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Why You Should Start Investing Early: The Power of Compounding

Road To Riches Book 06

When it comes to investing, the earlier you start, the better. This is because of the power of compound interest. Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. In other words, it's interest on interest.


The power of compound interest is most effective when you start investing early and let your money grow over a long period of time. For example, if you start investing Rs. 10,000 per year at the age of 25 and continue to do so until you're 65, you could end up with nearly Rs. 50 Lakhs, assuming an average annual return of 8%. However, if you wait until you're 35 to start investing the same amount, you would only end up with around Rs. 25 Lakhs.


This is why it's so important to start investing early. The earlier you start, the longer your money has to grow and the more time you have to take advantage of the power of compound interest.

But how do you start investing early?

Here are a few tips for young Indian investors:

  • Start small: You don't need a lot of money to start investing. Even small amounts can add up over time.

  • Set a goal: It's important to have a clear investment goal in mind. This will help you stay focused and motivated.

  • Be consistent: Set up a regular investment plan and stick to it. This can be done through SIP (Systematic Investment Plan)

  • Diversify: Diversifying your investments is important to minimize risk. Consider investing in a variety of assets such as stocks, bonds, and real estate.

  • Educate yourself: Investing can be complex, so it's important to educate yourself about the different investment options available and the risks and rewards of each.

In conclusion, starting early is one of the most effective ways to take advantage of the power of compound interest. By starting early and being consistent, young Indian investors can set themselves up for financial success in the future.


"The biggest risk of all is not taking one." — Mellody Hobson

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