Meet Priya and Divya, twin siblings with very different approaches to money. Their story shows how small decisions early in life can lead to big differences down the road.
Priya's Smart Start
Priya landed her first job at 22 and immediately started investing ₹5,000 a month in a diversified mutual fund. She wasn't an expert, but she knew that starting early was important.
"It's not much," she thought, "but it's a start."
Priya stuck to her plan, through festivals and sales. Some months were tough, but she treated her mutual fund contribution like any other bill – it had to be paid.
Divya's Delayed Decision
Divya, on the other hand, decided to enjoy life first. "I'll start investing when I'm older and earning more," he said. He spent his extra cash on eating out, the latest smartphones, and trips to Goa.
At 35, Divya realized he needed to catch up. He started investing ₹10,000 a month – double what Priya was putting away.
Fast Forward to 50
When the twins celebrated their 50th birthday, they compared notes:
- Priya had been investing ₹5,000 monthly for 28 years (336 months).
- Divya had been investing ₹10,000 monthly for 15 years (180 months).
Assuming their mutual funds earned an average of 12% per year (a reasonable long-term return in the Indian market):
- Priya's account had grown to about ₹1.45 crore.
- Divya's account had reached around ₹58 lakh.
Divya's balance was significantly lower than Priya's, despite investing twice as much each month. The power of starting early and compound interest had worked its magic for Priya.
The Moral of the Story
This tale isn't about Priya being "better" than Divya. It's about the incredible power of time in investing. Starting early, even with small amounts, can lead to big results.
Remember:
- Start as early as you can.
- Be consistent, even with small amounts.
- Choose a diversified investment like a mutual fund to spread your risk.
- Let time and compound interest work their magic.
Remember, "Rome wasn't built in a day," and neither is financial security. But with patience and consistency, you too can build your own financial empire. After all, "The best time to plant a tree was 20 years ago. The second best time is now."
A Tale of Two Siblings