With rising everyday costs and competing financial priorities, it can be tempting to put off investing until there’s more room in your budget.
You may be waiting until you can contribute more, feel more confident about your finances or find the right moment to begin.
But when it comes to building long-term savings,
how much you invest is only part of the equation. Time matters too.
Starting sooner, even with a smaller amount, gives your money more time to potentially grow through compounding. Over the years, that extra time can make a meaningful difference.
What is compounding?
Compounding happens when investment returns generate returns of their own. Your money can grow through returns on both your contributions and any earnings that remain invested.
Think of a snowball rolling downhill: as it moves, it can grow by building on what it has already accumulated. Compounding works in a similar way, but investment growth does not follow a predictable path. Values and returns can fluctuate.
The same principle can apply to investing. The longer your money remains invested, the more opportunity it has to benefit from compounding.
Starting sooner can make a difference
Consider two people who contribute the same total amount to their investments over time.
One starts sooner with smaller, regular contributions. The other waits several years, then contributes more each month to try to catch up.
Although they contribute the same total amount,
the person who starts sooner gives their money more time to potentially compound. That extra time could make a difference, but it does not guarantee a higher balance. Investment values and returns can fluctuate, and growth is not guaranteed.
When planning for long-term savings, consider both how much you can contribute and when you can begin. Even a smaller contribution has more time to potentially compound when you start sooner.
You don’t have to start big to get started
You may feel that investing isn’t worthwhile unless you have a large amount to contribute.
But you don’t need a large contribution to take the first step.
Start with an amount that fits comfortably within your budget. As your financial situation changes, you can review and adjust your contributions.
The important thing is to consider what works for
your circumstances, your budget and your goals.
Waiting has a trade-off
There are valid reasons to wait. Paying down debt, covering everyday expenses or building an emergency fund may need to come first.
Understanding how a delay could affect your long-term savings can help you make an informed decision.
Our
Investment Postponement Calculator can help you explore different scenarios and see how delaying regular contributions could affect your long-term savings.
Small steps can add up over time
You don’t need to have your entire financial future figured out today.
A conversation with your financial advisor can help you identify a practical first step.
Ask yourself:
What could starting today, even with a smaller amount, mean for my long-term goals?
To get the conversation started, ask your advisor: What are my current financial priorities? How much could I comfortably contribute? How could investing help me work toward my goals? Together, you can explore an approach that fits your circumstances.
Ready to explore your options? Talk to your financial advisor about how starting sooner could fit into your financial plan.
Investment values and returns can fluctuate, and growth is not guaranteed. Any examples or calculator results are for illustrative and educational purposes only and are not intended to represent the actual performance of an investment.
