Start Young Live Big

Heard this tag line on the radio for the new Audi Q3 and it occurred to me what an apt line for my next blog. I am sure you will know that I am not recommending that you go and buy the new car.

Actually it is quite opposite, “Start young, Live big” would be a great tag line to get young people interested in investing money earlier in their life.

If you you have read the earlier blog The Risk of Living too Long you would have seen how the amount of money required in the near egg increases as the expected life span increases. All this is because of the compounding of the expenses which works against us as an enemy. However you can make same compounding your friend by investing over a longer periods of time. And trust me the results are phenomenal.

Let’s take a simple example: you need INR 1O crore in your nest egg at the age of 60 years. Now depending on when you start saving for it you would require the following annual investments to get to that magical number (assume a 10% return on investment):

Start at the Age of 25 years: INR 3 lacs
Start at the Age of 30 years: INR 5 lacs
Start at the Age of 40 years: INR 14 lacs
Start at the Age of 50 years: INR 49 lacs

So my young friends it is a great tag line but not just for the Audi Q3 but also personal financial planning. You can live big, achieve your dreams if you start young.

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