My nearly-five-years-old son thinks he's too young to go to school. On any typical school day, he's exasperated when he's woken up. Of course, most of us don't like to wake up early, but sleep seems even more precious to a kid who doesn't seem to understand the logic behind needing to wake up. "I'm too young to go to school," he'll say. "I'll start school when I'm your age."
But he has to start early, we all did and so will our kids. You start school when you're very young because you need the education when you're older. The sooner you learn, the better you're able to apply the knowledge that you've learned. And of course, there's the whole bit about having a strong foundation as well. The things we learn and adapt to early in our lives help us study further and amass degrees. This is why schooling begins at an early age, so that the children can learn the basics while they're young.
Why, then, shouldn't investments also begin at an early age. Obviously not when you're a kid, but at least when you've started earning. Youngsters in their early 20s, when they begin with their first jobs, wouldn't be too interested in saving and investing for their retirement, which is an eon away, much like the 4- or 5-year olds who can't understand why they've to go to school at such an early age. The young students are beginning early for college that is 12-15 years away. For a young earner, retirement is nearly 40 years away. So, to plan for that is something wouldn't naturally come to mind.
But the advantages of starting investing early are unparalleled. In most cases, you don't have anyone depending on your income when you start earning. That is the best time to inculcate the habit of saving. Sure, you'd like to spend the money you earn on products and services, and there's nothing wrong in being materialistic. But if you can manage to invest even a small amount to begin with, you'll see your savings grow substantially. There's something called the power of compounding that also comes into play, and it makes a huge difference without being conspicuous.
So, start early. Start at a time when you have the ability and capacity to make substantial contributions for a brighter future. Your destination might be far away, you might not even know where you're headed, but the sooner you start off, the better chances you have not getting stuck in the middle of the road.
This story first appeared in August 2015.