Most people have varying answers to the question, “How long should you invest your money for ?”

The time duration ranges from 1 to 5 to 10 years. Rarely have we come across anyone who wants to invest for 30 to 40 years.

However, before we answer the ‘How long…” question, another important question to ask is “When should one start investing their money ?

The answer: You should start from the day you start earning money.

That’s because the earlier you start, the more the power of compounding grows your money.

Ok, so once you start investing, How long should you continue to invest ?

The Answer: It depends

It depends on your goal. If you are 25 years old, you should invest

  • a small percentage of your monthly income for the next 35 years till retirement
  • a small amount of money for your child’s education for 15 to 16 years (i.e. if your child is 1 to 2 years currently)
  • for 3 to 5 years till you achieve the downpayment goal for buying a house (i.e. if you want to buy a loan)
  • for 7 to 10 years till a full market cycle has been achieved ( if you don’t have goals and just want to grow your money )

Most of us work very hard at our jobs / businesses to grow our income. However, when it comes to growing the money which is already with us, we tend to get lax and leave it lying around in a bank or a fixed deposit.

With time inflation will just destroy the value of your money and the later you start, the more you will lose.

Take a look at how 10 years makes a difference

Let’s take two friends Ram and Shyam aged 25 years old.

Ram starts investing Rs 5000 per month and continues to do so for 55 years till the age of 50.

Shyam is lazier and starts investing Rs 5000 per month at age 35 (10 years later) and continues for 25 years till age 60.

Now, both of them have invest Rs 15 lakhs over a period of 25 years.

At the time of their retirement, assuming both their money grew at an annual rate of 12.5%

Ram will have approximately:  Rs: 3.15 crores

Shyam will have approximately: Rs 97 lakhs 

You might be wondering why such a huge difference if they both invested the same amount of money for 25 years.

The reason is because Ram started early and his money got an extra 10 years to compound. And as his corpus grew over the years, he earned larger returns.

That’s why you should start investing as early as possible with how much ever you can afford.

You can start with as low as Rs 1000 and increase it every year as your income increases.

Note: The above illustration is for investment in equity asset class ( e.g.SIPs in Equity Mutual Funds). If Ram had invested in Debt asset class earning 8% interest, he would have instead got about Rs 1 crore.

This does not mean that you should invest all your money in Equity assets – Your portfolio should have an ideal mix of Equity, Debt, Real Estate and gold assets to give you a diversified mix. This ensures that your money grows safely and is enough to meet your needs.


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