Wealth Creation: Start investing at 20 and grow 93x, start at 40 and only 10x

Magic of Compounding

Most people believe they need a large amount of money to start investing. But in reality it is time not the size of your first investment that makes the biggest difference. The earlier you start the longer your money gets to grow and the results can be astonishing.

Let’s take a simple example. A FundsIndia report shows how much your money can multiply by the time you turn 60, depending on when you start.

The earlier you start investing the more powerful compounding becomes. At an assumed annual return of 12 percent if you start at age 20 your money can grow 93 times by the time you are 60. Start at 25 and it grows 53 times. At 30 it becomes 30 times. At 35, just 17 times. Wait until 40 and it only grows 10 times. At 45, about 5.5 times. At 50, merely 3.1 times. And if you begin at 55 your money grows just 1.8 times. The difference is striking because starting early gives your investment decades to multiply while delaying even a few years can sharply cut your potential wealth.

This simple math shows how powerful compounding can be when given enough time. A person who starts investing just five years earlier say, at 20 instead of 25 ends up with nearly double the wealth at 60.

For instance, if you invest Rs 1 lakh at the age of 20, it can grow to around Rs 93 lakh by 60. But the same Rs 1 lakh invested at 40 would only become Rs 10 lakh. The gap is not because of how much you invested it is because of when you started.

This difference is called the power of compounding often described as interest on interest. Your returns start earning their own returns over time and that snowball effect gets stronger the longer you stay invested. It is also important to note that salaries are usually lower at a younger age and tend to rise as one grows older.

Even a small amount started early can grow into something substantial. What matters most is consistency. Missing the early years means losing the most powerful force in investing which is time.

So, if you are in your 20s or even your early 30s the best financial move you can make is not about finding the next big opportunity. It’s simply about starting no.

So if you are young the best gift you can give your future self is to start now even with a small amount. If you invest regularly your money will have decades to grow.

The takeaway is simple. Don’t wait to have more money to start investing and start early and give time the chance to work for you. Because when it comes to building wealth time beats timing always.