It's a question that everyone has asked at some point in their lives: why does it matter when I invest my money? It seems like a fair enough question - after all, the earlier you invest, the less time your money has to grow, right? Wrong. 

The sooner you start investing, the more time your money has to grow, thanks to compound interest. Let’s discuss the many benefits of investing early and show you exactly why it matters!

Is early investing good?

Yes, early investments are good. Investing early is a great way to make money. You can choose from different types of investments, including stocks and bonds. If you invest early, you will have the opportunity to see your money grow over time. If you wait too long, however, you may miss out on the opportunity altogether. 

Many people wait until a company is established before investing in it and end up missing out on some of its most profitable years. If you invest early in a company that does well, your money will grow even faster than if you had waited for it to become established first.

Learning from experience is arguably the best way to become a successful investor. Not everyone has the time or opportunity to invest in a wide variety of companies and learn from their successes and failures firsthand. 

But if you can get started early, you'll have a significant advantage. One of the best things about investing early is that it gives you time to learn from your mistakes. If you make a wrong investment decision, you can usually recover quickly if you catch it early enough. 

On the other hand, if you wait too long to invest, you may not have the same opportunity to learn and grow from your mistakes. We'll go into more benefits of early investing below.

What does investing early mean?

Investing early means investing before you need to. It can be easy to get caught up in the moment, especially when you're young and have a lot of energy. You might think that investing is something for old people and boring people. You might also think that you don't have enough money to invest yet—but that's where you're wrong! These are two of the most common myths about investing.

Investing early means putting aside some of your money for the future, even if it feels like there are other things you could spend it on right now. Delayed gratification is challenging to comprehend for some people, but investing early can help unlock financial freedom and free up time for you to live a more meaningful life. There are many more benefits to investing early. 

Benefits of investing early 

Now that we have established what investing early means and why it's good, let's explore some more benefits of investing early.

Benefit #1 - Peace of Mind

If you know that you've already started saving for your future, you can relax and not worry about it as much. Worrying about money is one of the leading causes of stress in America

By investing early, you can take some of that stress off of your plate. Stress is a common cause of emotional turmoil as well as health problems. 

Taking care of your finances early allows you to have a more peaceful state of mind. This is because your financial future will be one less thing that you have to worry about. 

Benefit #2 - More Time to Save

The sooner you start investing, the more time your money has to grow. This is thanks to compound interest, which we will discuss in more detail below. Saving to invest takes time. 

Dollar-cost averaging (DCA) is the most commonly recommended strategy, but if you prefer to save up a lump sum (for example, $1000) and invest it all at once, that is also an option.

Some investments, such as real estate, can take longer to save for, so if you're thinking about investing in something like this, it's best to start saving to invest as soon as possible. 

Benefit #3 - You'll be able to weather unexpected expenses

We all know that life comes with its share of curveballs, but they're even more unpredictable when you're young because your income is likely lower than it will be in the future. When these unexpected expenses come up, having money saved up will help ensure that they don't derail your financial security. 

One way that investing early can save you from dangerous financial situations is through income investments like stocks. For example, if you lose your job but receive some income through dividends, at least you will have some money coming in to help you get by until you are employed again. 

This passive income from deciding to invest early can save you from taking out predatory loans (loans with very high-interest rates) or selling valuable items. 

Benefit #4 - More time to reallocate & readjust

Diversifying your investments is vital to reducing risk. By investing early, you can spread your money out over different types of investments and different companies. This will help to protect you if one investment doesn't do well. 

For example, if you invest in a new different ETF every 4 years, you're more likely to have a successful investment portfolio than if you invest in the same ETF year after year. If you start investing at age 20, you'll have 10 different positions by the time you are 60. 

This differs from someone starting at 56 as they would only have one position by 60. Although ETFs are pretty diversified as it is, the point is that the earlier you start, the more time you have to reallocate and readjust your portfolio as you learn more about investing. 

Perhaps, an ETF tracks a market that is expected to grow over the next decade, but two decades from now, a different market is expected to have higher returns. If you start investing early, you can change your portfolio to reflect this new knowledge.

Benefit #5 - A more comfortable retirement

When you put money into a retirement account, it's invested in a way that will help it grow over time. And the sooner you start saving, the more time your money has to grow into something that will help you out when it comes time to retire. 

Plus, if you start saving now and invest wisely, by the time retirement rolls around, your money could be worth even more than what it is today. Retirement can be difficult for many people. 

Running out of retirement money is commonly listed as one of the biggest fears that people have. But if you start investing early, you can help ensure that doesn't happen to you. Living in fear or poverty in the golden years is not a way that anyone wants to spend their time.

Benefit #6 - More time to pursue passions

Imagine you wake up one morning, and you have to choose between going to your job or going to do something that you're passionate about. What would you choose? For most people, the answer is obvious. 

They would choose to follow their passion. But what if you didn't have to choose? What if you could have both? That's the beauty of investing early. 

By investing now, you can set yourself up for a future where you don't have to choose between your job and your passion. You can have both. Of course, this doesn't mean you'll never have to work again. 

But it does mean that you can choose to work because you want to, not because you have to. And that's a pretty great way to live. The way this works is that you don't necessarily have to wait til you're old to retire. You can retire early and still have enough money to live off of while you pursue your passions. 

All you need is for your passive income to exceed your monthly expenses. And if you start investing early, it's more likely that you'll be able to reach this goal. Through income-producing investments such as dividend-paying stocks, you can set yourself up to have a comfortable retirement while still pursuing your passions.

Some people even combine their passion with investing. For example, if you are passionate about environmental causes, you could invest in green energy companies. This would allow you to make a difference in the world while also growing your investment. By learning how to invest and allocating capital to things you enjoy, you can make a real difference in the world while securing your financial future. 

Benefit #7 - Allows compound interest to work

Another benefit is that you'll have time to make intelligent decisions about what investments work best for you—and how much risk is suitable for where you are financially today. Even if you are still learning about individual stocks or broader investing topics, simply dollar-cost-averaging into an S&P 500 index fund can create a special compounding effect. 

The earlier you start investing, the more time there is for compound interest to work its magic on those savings accounts. The longer you save, the more time your money has to grow. That means that compound interest can have a considerable impact on your financial security. 

The more time you give your money to grow, the more significant its impact will be over time, and below we will show how this works its magic through a simple chart. But for now, it's essential to know that compound interest is when you earn interest on your investment, and then you also earn interest on the interest that you have earned. This can cause your money to snowball over time. 

Benefit #8 - More time to learn from your mistakes

We briefly went over this earlier, but learning how to learn from mistakes is something that most people avoid. The fear of making mistakes in the first place is what often stops people from putting their first dollar into the markets as an investor. 

You won't be able to get rich overnight, but if you start saving and investing now, you'll have more time to learn from your mistakes and improve your strategy. For example, a common mistake is trying to time the market or investing above your risk tolerance

By making the mistake and learning how to invest more strategically to match your investor profile, you can improve your chances of success over time. 

It's easy to get the hang of saving and investing in your 20s. You're still young, so you haven't made too many mistakes yet. That's why starting now is so essential—you have more time to learn from your mistakes and improve your strategy than if you wait until later. 

But with that being said, don't think that just because you are older, you can't start saving and investing. In fact, not investing early is a mistake in itself, and now you can choose to learn from this mistake. 

If you're just starting, you don't have much experience with investing. You may make some mistakes in the beginning, but as time goes on, you'll be able to learn from those mistakes and improve your strategy. 

The more time that passes, the better your chances of earning a good return on your money will be. Experience can lead to painful moments. But as Ray Dalio puts it, "Pain plus reflection equals progress." 

Ray Dalio's career is a perfect example of how he benefited from investing early. After making the tragic mistake and betting too heavily that the stock market would crash, he lost a ton of money and was made into a laughing stock by the media. 

But instead of giving up, he used that experience to reflect on what he did wrong and how he could improve his investment strategy. As a result, he became one of the most successful investors in history. 

His reflection on the experience and pain led him to seek the devil's advocate (opposing view). Rather than boost his ego and surround himself with people that agree with everything he says, he now actively invites people that have different opinions to challenge him. 

This has helped him refine his investment strategy and make better decisions in the future. If he didn't learn from this mistake early and made this mistake later on in his life, he might not have had the time to recoup his losses and become as successful as he is today. 

So, if you're just starting, don't be afraid to make mistakes—you can learn from them and use them to improve your strategy. And if you're older, it's not too late to start either. 

The sooner you start saving and investing, the better your chances of earning a good return on your money will be. We all make mistakes in life, and investing is a part of it but having the time to course correct them is crucial for success. 

Benefit #9 - Inflation protection

Inflation reduces the purchasing power (value) of fiat currencies (eg. US dollar) over time. This is due to the government printing money, which causes the prices of goods and services to increase. 

Simply put, if inflation was at 5% and you had $1000 saved in the bank, one year later, you'd only be able to buy $950 worth of goods and services. If you waited another year to start investing after that, it would have a purchasing power of only $902.5. 

By only saving money, it makes it difficult to reach the goal you desire. This is a surface view of how inflation reduces your wealth over time. 

The answer is to invest in assets that have a higher rate of return than the inflation rate. For instance, if you expect inflation to be at around five percent, you'll want to find investments that will give you a return of more than 5%. This way, you'll be able to keep up with the rising prices and maintain your purchasing power. 

One of the best ways to achieve this is by investing in stocks. On average, stocks have returned around 10.5% annually. This means that if you had invested $1000 in the stock market, one year later, you would have $1150. Yes, the purchasing power of that $1150 would be 5% less, but it's still better than $1000, significantly if that amount was also devalued by 5% thanks to inflation. 

Benefit #10 - You can learn more about the world

When you start investing, you begin learning more about that industry and consider how the future might look. For example, if you're interested in investing in renewable energy, you might start reading about the different technologies that are being developed and which companies are leading the way. 

You might also start thinking about the political landscape and how that might impact the industry. If a country were to pass a law that favored renewable energy, that would be a massive boost for the industry and the companies that are involved in it. 

This information can help you become a better investor and make more informed decisions. Not only will you learn about the investment world, but you'll also learn about the companies that you're investing in. 

When you read about a company's plans for the future, its financial statements, and its competition, you gain a better understanding of the business and how it operates. This can help you make more informed decisions about whether or not to invest in that company. 

After learning about all the aspects that might affect your investment and thinking about the future, you gain a unique insight that non-investors have. This can help make you more successful in other areas of your life as well. 

For example, let's say you are learning about investing in electric vehicles if you own a gas station. Perhaps reading about how consumer spending is going towards electric vehicles will help you decide to sell your gas station and open an electric vehicle charging station instead. You'll learn more about the world as soon as you start investing because you'll have a vested interest. This means that you'll be more likely to pay attention and learn about the different factors that might affect your investment. When you're invested in something, you want to know everything about it to make the best decisions possible. 

Benefit #11 - You can invest in a world you want to see

When you start investing, you can invest in a world that you want to see. For example, if you're interested in sustainability, you can invest in companies focused on renewable energy or reducing their carbon footprint. 

Your capital is a vote of confidence for these companies and gives them the resources they need to continue working towards a more sustainable future. Not only can you invest in a world you want to see, but you can also help create that world. 

When you invest in companies that are focused on making positive change, you're not only supporting those companies, but you're also helping the economy within that industry grow. This can have a ripple effect and help create more jobs, which in turn helps reduce poverty and improve living standards.

Investing also can give you some voting rights (depending on the company and how many shares you own). This means that you can have a say in the direction that the company is going. 

For example, if you've invested in a company and you disagree with the way it's being run, you can vote for change at the shareholder's meeting. While your vote might not be the deciding factor, it can help sway the opinion of other shareholders. 

On a smaller scale, let's imagine that there's a business that sells organic, locally grown foods, and healthy living is your passion. If they need capital to open more stores and one of them opens up near you, you can invest in them and see the fruits of your labor (literally). 

You can also talk to the owner and get involved in the business. This is a great way to use your money to invest in something you're passionate about and see it grow. 

Generational wealth depends on a long-term perspective. Even if you are reading this and you don't believe you are young enough to see any meaningful investments come to fruition in your lifetime - know that by investing early, you are giving future generations the ability to have a better life. 

Rather than have your hard-earned money degrade due to inflation or be invested by the bank in causes that don't align with your ethics or interests, take some responsibility and make an investment today.

Investing early vs late chart

Let us look at a few charts, assuming a 10.5% annual rate of return, and each investor starts with $10,000 and does not contribute anymore from their initial investment. The only difference is that 'Investor A' starts at age 20 while 'Investor B' starts at age 40. Both are looking to retire at age 65.

Why Investing Early Matters
Why Investing Early Matters

As you can see, 20 years has a difference of $772.573.14. Investing early is a great way to secure your financial future and set yourself up for success. By taking advantage of compound interest, you can ensure that your money grows as much as possible. 

How to invest earlier?

There are a few strategies to effortlessly start investing early. The most common one is to set up an automated savings plan where a fixed sum of money is transferred from your checking account to your investment account regularly, such as monthly. This way, you can "set it and forget it."

Initial procrastination is what stops most people from doing this. However, getting through the setup process is much easier than you might imagine. You don't have to speak with anyone or even leave your house. 

Once it's set up, you'll have the satisfaction of knowing your money is working for you without any extra effort on your part.

Another way to start investing early is to set up a 401k or 403b through your employer. If your employer offers matching contributions, take advantage of that free money! Even if they don't offer to match, these retirement accounts are still a great way to save for the future. Again, the fear of change or speaking to your HR department can be debilitating, but it's worth it to get started on the right foot.

An easy way to start investing early is to use a service like Acorns or Stash, which allows you to start investing with very small amounts of money. These services make it easy and painless to get started, which is perfect for those intimidated by the process. 

A common reason why people wait to start investing is that they don't think they can save enough money to start. But by rounding up purchases and investing the spare change, you can start building your investment portfolio without even noticing.

Often, after that first dividend payment or the satisfaction that you've grown your wealth from investing, the motivation to keep going becomes easy. The key is just to get started.

Why time in the market is better than timing the market

One of the best things about investing early is that you don't have to worry about timing the market. When you're young, you have the advantage of time on your side. You can afford to take more risks and weather any short-term volatility because you know you have plenty of time to make up for any losses.

Many people hesitate and wait to invest because they believe that a market correction is just around the corner. People who don't invest early say things like, "I'll just wait until after the elections" or "The potential war is going to tank the market, so I'll wait to invest until the fear is over." 

But the fact is that no one knows when a market correction will occur. The best thing you can do is to start investing now and take advantage of compound interest. 

If you are trying to catch the bottom and succeed, you will indeed make more money than someone who invested at the top. But the chances of you succeeding are slim to none. It's much better to just dollar cost averaging into the market and let time work its magic. 

It can be helpful to have cash and buying power to open a position during corrections in undervalued assets. Still, a consistent and early flow into stable assets that have historically increased over time is a much wiser strategy. 


Investing early has several benefits that can set you up for success. As you can see from the charts above, starting to invest even just a few years apart can be the difference between having a comfortable retirement and struggling to make ends meet. 

So if you're on the fence about whether or not to start investing, remember all the benefits of doing so and set up a strategy and act on it. Time is money when it comes to investment. Your future, the world you want to see, and your purchasing power depend on it. Money can be seen as a short-term store of energy, use it effectively, or it will be wasted away through inflation or on things that don't align with your values. 

Investing is a valuable skill that you shouldn't wait to learn. Set up your automated investment flows now and consider this your first step in taking control of your financial future.