We will discuss how big difference in savings can be made by starting an investment at a young age and at an early age.

In this article, we will discuss how big difference in savings can be made by starting an investment at a young age. This is an amazing multiplier of principal and compound interest. We explain this by example.

Let's compare two friends. Sonal and Prem. Sonal starts at Rs 750 every year. She starts investing from her age of 15 and closes after 15 years.

Prem on the other hand starts investing 5,000 rupees every year. He is 30 years old at the time. He continues to invest until he is 60 years old. Sonal invested for 15 years. Prem invested for thirty years.

If both together earn 15 per cent annual return after tax, then who will have more wealth at the age of 60?

Sonal's savings of Rs 750 every month, which is done from the age of 15 to 30, will deposit Rs 27.7 lakh at the age of 60. On the other hand, Prem's savings of Rs 5,000 a year will increase to Rs 25 lakh during his 30 to 60 years of age.

Both will accumulate much better savings than their investments. Sonal succeeds in saving more money, that too in less years. Therefore investment should be started at a young age. This example shows what is the benefit of starting an investment at a young age.

In short, the interest of compound interest on multiples, ie principal, is amazing that by investing quickly, the amount increases rapidly. Whenever you invest every year your money is working for you.