TLDR: Start saving small and scale up

Do you know the most common excuses that you hear from people when it comes to investing?

• I will do it later

• I have just started work, retirement is so far away

• I don’t make enough money to save

• YOLO - You Only Live Once, so why bother?

This or some other flavour of this theme.

Investing in the smart phone era is so easy. You don’t have to visit an office to get things done. There is not a ton of paperwork that is needed. Accounts can be opened online, funds transferred on your phone but we are saving less in general that previous generations.

How are we faring when it comes to debt?

The numbers don’t look good. The savings rate is falling and the debt is increasing.

The Trick - Start small

Not everyone is lucky to start off at a well paying job with tons of saving potential. So for the rest of us, the answer is start small. If your job pays only 10,000 per month, set aside 1000 every month towards investments. 10% savings rate is nothing to go gaga over, but it is a start.

If you are unable to save 1000, start by saving 500, you can increase based on your salary growth.

Let us use an example

Think of a person X who starts work at age 23 with a salary of 10,000 and is able to set aside 10% every month towards investments.

Every year, he or she is able to increase their investments by 10%. Assuming a return of 10% annually.

At the end of 10 years, person X is sitting at a portfolio of 298,057

At the end of 20 years, person X is sitting at a portfolio of 1,546,167

At the end of 30 years, person X is sitting at a portfolio of 6,015,540

At the end of 40 years, person X is sitting at a portfolio of 20,803,682

By the time, they are ready to retire, they have a decent portfolio. Even after considering inflation, the sum is not bad. This is an idiot proof approach to investing, if you have some questions on where to invest, look at my Indian market lazy portfolio for inspiration.

Conclusion

Start now, not tomorrow, not next week, not after the bonus comes, not after the job change or next promotion. Start now, start today.

Compounding will do wonders to your portfolio. Set a small attainable goal with a clear time horizon. Once you reach that goal, make your next goal 10X the first goal, rinse and repeat. You will be well on your way towards financial independence.

Good luck and Happy investing.

#MyFatFIRE