Friday, October 20

Investment: why now?

Simple question, simple answer:
The earlier you start, the bigger impact there will be on your investment.

Let us have an example.

You are now 35 years old. You will need the money at 60 when you retire.

  • Money available now: US$50,000 (or $50K)
  • Long-term bank deposit rate is 3.5%, slightly above long-term inflation
  • Long-term investment return is 8%

Note: for simplicity, the final amount is not discounted for inflation for all 3 cases, but this does not affect the comparison.

Case 1

  • Do nothing, i.e. money sitting in the bank for 25 years.
  • The $50K will turn into $114K.

Case 2

  • Keep the money in the bank and start putting it into investment when you are 50.
  • The $50K will turn into $184K (61% more than Case 1!)

Case 3

  • Put money into investment when you are 35.
  • The $50K will turn into $317K (73% more than Case 2, and 178% more than Case 1!)

The impact is more pronounced if you include the money saved every month.


  • The decision of investing early, if at all, significantly impacts your asset size in the future.
  • Although there are bound to be ups and downs in the investment returns throughout the years, a consistent, non-speculative investment program (set by either yourself or your adviser) will give you a much better return than the deposit rates.

I am happy to send you an excel sheet if you would like to play around with the cases illustrated above.

For related investment topics, please visit our workshop "Smart Investment for Beginners".


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