Investments - Importance of Starting Early

• It is a story of two friends Ram & Shyam.
  
• Ram starts saving when he turns 25 and invests Rs 50,000 every year. At the end of ten years, Ram has been able to accumulate Rs 5 Lakh.
  
• After this, he stops further savings, but does not withdraw his investments. He would have been able to accumulate around Rs 95 Lakh by the time he turns 60. Let us assume that he earns a return of 10% every year.
  
• During the first few years of his life Shyam enjoyed life spending money on all kinds of things rather than invest regularly. At the age of 35 reality suddenly dawns on him and he starts investing Rs 50,000 every year. He invests this amount every year till he turns 60, i.e. for 25 years. Assuming he also earns a return of 10% per year on his investments. At the end Shyam would have managed to accumulate Rs 54.1 Lakh.
  
• Ram has invested only Rs 5 Lakh over the ten years he invested. In comparison, Shyam over the 25 years has invested Rs 12.5 Lakh (Rs 50,000 x 25 years).
  
• Even after investing more than twice, Shyam has managed to accumulate Rs 54.1 Lakh, which is around Rs 41 Lakh less in comparison to Ram.
  
• It not only important to Save but it is equally important to Save Early. It is never too late and it is never too early.