Most of us don’t start investing until we are 32 years old but wish we'd started almost a decade earlier.
Most of us don’t start investing in shares until we are 32 years of age, according to a survey of almost 1,900 Motley Fool users. Men typically started at 29 and women started a little later at 33. However, nearly all of us wish we'd started investing much earlier than we actually did. The same people said that they thought the best time to start investing was 23.
So why do people delay their first investment? Obviously when we are young, we have other more pressing financial commitments such as saving up a deposit for our first home, putting money aside for a wedding or paying off debts relating to university studies.
Consequently, putting money into the stock market and learning about investing in shares is unlikely to figure in the plans of many twentysometings. But putting off buying shares by even as little as a year can make a significant difference to our eventual wealth.
Don't delay ... invest today
For example, based on historical stock market returns from the latest Credit Suisse Investment Returns Yearbook, a 23-year-old investor who puts £100 a month into shares could build a retirement pot that is worth £537,868 by age 65. However, postponing the start by a year could reduce the size of the pot to £491,401. So, a twelve-month delay, which will ease your short-term financial outlay by £1,200, could cost you £46,467 in the long term!
Delay until your initial investment until you're 32 and the final sum you would have built up would be just £236,100. Put another way, cutting about 20% off the length of time you invest and the final sum you can expect could fall by more than 55%!
In recent years of course, we’ve seen flat or even negative investment returns. Returns from the stock market vary significantly year on year but, on average, the earlier you start investing the better your chances of accumulating a worthwhile retirement pot. It’s something we've harped on about here at the Fool since we first hit the Internet – it’s the ‘Miracle of Compound Returns’.
So don’t be put off by the fact that shares have been on a poor run recently. In fact the period after a slump is often when the stock market produces some of its best returns. The average no-notice savings account stands below 1.5% but the stock market offers a dividend yield of nearly 5% plus the prospect of long-term capital growth. That means the stock market is looking more attractive than it has done for a very long time.
> One of the easiest ways to invest in shares is through an index tracker – find out more here. Alternatively, try our Sharedealing service for a low-cost way to buy and sell individual shares.
