Lord Ganesha is the symbol of new beginnings and prosperity. Accumulating money at a fast pace calls for the investment journey to commence as early as possible. The sooner you start, the larger the corpus you stand to build.
As Ganesha epitomises auspicious beginnings, what better day could be there to start your financial journey as Ganesh Chaturthi.
It may sound a little unusual to start investing in early 20s. But regardless of how bizarre it may sound any wealth advisor in his right mind will tell you to start the investment journey as early as it can be.
An auspicious beginning
As they say the journey to a thousand miles starts with one step, the same way the journey to achieving a series of financial goals begins with a humble start. And it is the beginning that makes the entire difference.
Anyone who understands the magic of compounding will tell you about the two prerequisites: first is to start the investment journey early in age and second is to stay invested for long.
And to fulfil the second condition, investors ought to meet the first condition as well i.e., to start the investment journey early.
Let us take an illustration to understand this. Suppose you earn ₹10 on a small investment of ₹100, then your total sum becomes ₹110 at the end of first year. Next year, if your portfolio rises by another 10 percent then your investment would rise to ₹121. And following this, another 10 percent appreciation in the third year would increase your investment by ₹12, taking the final figure to ₹133.
So, regardless of the same percentage of increase i.e., 10 percent leads to an increase of ₹10, ₹11 and ₹12 in three consecutive years. With the passage of time, the accumulated savings will keep increasing.
This, in other words, is known as an effect of ‘compounding’, also referred to as ‘magic of investing’ by Jim Rogers, an American investor and financial commentator.
Magic of compounding
Let us take another example. If you park a small sum of ₹7,000 every month in a stock or mutual fund that offers a consistent return of, say, 10 percent per annum then after 10 years, it accumulates to Rs. 14,45,000. This grows to ₹29.25 lakh in 15 years and to ₹53.59 lakh in 20 years.
So, as we can see in the table below that by keeping everything (rate of interest and investment amount) constant, the increase in corpus takes place at a faster pace. From 10 to 15 years, the corpus increases by ₹14.8 lakh, whereas in the next five years, it increases by ₹24.34 lakh.
| Tenor | Interest (%) | Corpus (Rs) | Increase (Rs) |
| 10 years | 10 | 14,45,000 | -- |
| 15 years | 10 | 29,25,000 | 14,80,000 |
| 20 years | 10 | 53,59,000 | 24,34,000 |
(Inflation not adjusted for)
No wonder then the magic of compounding makes handling investments an extremely simple affair. The oracle of Omaha Warren Buffett once referred to investing a ‘simple game’ that financial advisors have made harder than it actually is.
Regardless or not, there are complexities in the financial decision-making; making a new beginning is not complex at all. Any true devotee of Lord Ganesha will vouch for this.
