Why starting early is better than starting big in investing

Patience and discipline are your allies when it comes to investing. There’s a little-known force that rewards those who act consistently - it’s called compounding. Keep reading to learn more about the power of compounding.

Published on 13 November 2025

3 min read

Compounding happens when your investments earn returns, and then those returns earn returns too. The power of compounding can transform a small investment into a substantial sum over the long run. The longer your money is invested, the more time it has to compound and the greater its growth potential. Compounding is the cornerstone of wealth creation.

Two simple things make compounding work:

Time:The earlier you begin, the more time your money has to grow.
Reinvestment: Keep your returns invested because that is how your investments grow.

New investors often ask: When should I start?

The answer is always now – the longer you wait, the more you will miss out on your investments earning returns and on the chance for those returns to grow even more.

Let’s make this simple.

Meet Mrs. A and Mr. B:

Mrs. A starts investing ₹5,000 per month at age 25. She stops these monthly contributions at age 35 - after just 10 years - having invested a total of ₹6 lakhs.

Mr. B starts later, at age 35, and invests the same ₹5,000 per month until age 55. That’s 20 years of investing, totalling ₹12 lakh - twice as much as Mrs. A.

Assuming a 12% annual return, here’s what they each have at age 55:

Mrs. A: ₹1.07 Cr.
Mr. B: ₹45.56 lakhs.

This illustration assumes a consistent annual return of 12% and is for educational purposes only. Actual returns may vary.

Despite investing a smaller amount and for a fewer number of years, Mrs. A ends up with more - because she started earlier. Her money had more time to multiply, even though she stopped her monthly contributions after 10 years.

Here’s how you can harness the power of compounding for your financial future:

1. Start early
The sooner you start investing, the more time your money has to grow. Even small contributions make a big difference over the years.

2. Stay invested for the long haul
Compounding works best with time. Avoid withdrawing funds too soon – market ups and downs are normal, but staying invested gives your money the best chance to grow steadily.

3. Reinvest your earnings
Whether it is dividends, interest or capital gains, reinvesting returns builds your capital, accelerating growth.

4. Be patient, not perfect
There is no perfect moment to start investing. Be consistent and give your portfolio time to grow.

Bottom line: Grow rich slowly

Compound returns can gradually turn a small investment into a significant amount of wealth. The longer your money stays invested and earning returns, the more powerful the compounding effect becomes.

Compounding works best over a long period, so consistency and patience are key. It's not a get-rich-quick scheme but a strategy for gradual wealth creation.

Disclaimer: This article is for educational purposes only.