Why Starting Early Matters

Compounding is the process by which the returns your investment earns are, in turn, reinvested and given the opportunity to earn further returns. Over a long horizon, this can meaningfully change the shape of an investment's growth — though the actual outcome always depends on the returns actually achieved, which are never guaranteed and can be negative in poor market conditions.

The role of time

All else being equal, an investment that has more years to potentially grow has more opportunities to benefit from compounding than the same investment started later. This is why 'starting early' is often discussed in the context of long-term goals such as a child's education, retirement, or a child's marriage — goals that are typically many years away.

Starting early does not remove market risk, and it does not guarantee that a specific goal amount will be reached. It simply means your money has more time available to work, assuming the investment performs as hoped. Use our Start Early Comparison calculator to see an illustrative comparison, based entirely on the assumptions you choose to enter — not on any historical fund performance.