Starting your investment journey early can make a huge difference in the long run, even if you begin with small contributions. Let’s dive into why getting a head start is such a great idea.
The magic of compounding
We’ve said it before, and we’ll say it again—one of the biggest reasons to start investing early is the power of compound interest. It’s like a snowball effect—your initial investment earns returns, and then those returns earn returns, and so on. Over time, this compounding can lead to significant growth.
Small contributions, potential for big gains
You might think that you need a lot of money to start investing, but that’s not the case. Even modest contributions can add up significantly over time. For example, let’s say you start with a £1,000 initial investment and add just £25 a month.
Over the years, these small amounts can grow into something substantial. Check out the graph below based on the performance of Dodl’s all-in-one fund (60% shares), that showcases the potential benefit of starting that little bit earlier.
More time to ride the waves
When investing in the stock market, you can probably expect some ups and downs along the way. By starting early, you give your investments more time to recover from any dips and benefit from the overall upward trend. This long-term approach can help smooth out the bumps and lead to more stable growth.
Flexibility and peace of mind
Starting early also allows you a longer timeline to reach your financial goals, whether you’re buying your first home or saving for retirement. Plus, if life throws you a curveball, you’ll have a cushion of time to adjust your plans without the pressure of a tight deadline.
To wrap up…
It’s never too soon to get going. The combination of compound interest, the ability to start small, and the long-term growth potential all work in your favour.
Add some cash to your account to kick off your investment journey today. As we’ve seen, over time even modest contributions can go a long way.
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🔔 Investing involves risk. Nothing in this article should be taken as advice - Dodl doesn't give advice, but we do hope the info is helpful!