Time is everything in investing.

When it comes to investing, your most valuable asset is time. Unless someone invents the flux capacitor and time travel, time cannot be gotten back once it’s gone. Delaying investing reduces the amount of time available for potential investment growth. While you can always begin investing later, you can never recover the lost time that compounding would have provided. As your investment grows, future returns are earned not only on your original contributions but also on previous investment gains. This process is known as compounding. A year or two of missed growth may not seem like much, but the longer that lost time becomes the more that lost growth begins to add up.

Take a look at two hypothetical investors, Jim and John. Our example evaluates the difference between starting investing at 25 years old, compared to the same investments beginning at 30 years old.

At 25 years old Jim begins investing $100/week. He’s a conservative investor and over time he hypothetically averages a 4% annual return on his investments. At 30 years old John also begins investing $100/week. For illustration purpose, He makes identical investments as Jim and also averages the same hypothetical  4% annual return.

Although Jim contributed only $26,000 more than John ($208,000 vs $182,000), his portfolio is over $113,000 larger because his investments had five additional years to compound. This is only with an investment of $100 per week. With larger investments, over time, the gap in the total portfolio’s value is much larger.

For example:

Investment of $150/week and $200/week respectively is shown in the table below:

The hypothetical 4% annual return used in this example is for illustration purposes only. The amount an investment may grow depends on many factors, including the rate of return. While higher returns can result in greater long-term growth, they typically involve higher levels of risk. Investment returns are not guaranteed and may vary over time. One other important thing to realize is that if the average returns were higher than 4% the difference also becomes even larger. Even a 1% difference is huge. Look at our original example with 5% returns instead of 4%.

If you’re thinking about getting started in investing, but don’t think you have enough money to make it worth your while, get started anyway. Don’t lose the time by waiting to investing. It doesn’t matter how much you can invest, only that you are investing to take advantage of the time you have. Remember, you can always increase the amounts you invest in the future, but you cannot get back time you haven’t used.

Before you begin investing take a look at our blog post on things to consider and think about before investing to help set yourself up on the right path.