Have you ever wondered what is the difference if you invest now rather than later?

Here we have an example to illustrate what we are talking about. Let’s say Lim started investing since he was 18 years old and Khoo only starts investing since he was 28 years old. Let’s also assume the return of investment is estimated at a conservative 10% per year (Yes, for Unit trust 10% is quite a conservative estimate).

Notice in the example, Lim only invested for 10 years with an investment total of RM10 000, while Khoo invested for 38 years with a total investment of RM38 000. We can see clearly that Lims profit is RM 645 742 or we can say his investments have grown 65 folds. But for Khoo, he has only managed to accumulate a profit or RM 362 448 or about 10 folds of his total investment.

Clearly, Khoo actively invested for a longer period and with a bigger amount than Lim but the difference between their profits are very big. This is the effect time has on the investment when we put compound interest in the equation.

So this brings us to the question, do you want to be like Lim or Khoo? The answer is clear, Lim has made the smarter choice and invested early. Like a Malay proverb that goes “Masa itu Emas” , translated “Time is Gold”, illustrates the point accurately.

Sheyzal Azman,
Financial consultant
sheyzal@yahoo.com