The same ₹5,000, at the same rate, put in at 20 rather than at 45. What is different about it?

The number of years it gets to grow — forty against fifteen

The three-times figure rests on an assumed 10% a year. How should a reader hold that number?

As arithmetic on an assumption — real returns arrive unevenly, and the bad years are when people stop

As what somebody investing at that rate ends up with, so it is dependable

As a rate the calculator sets for you

Lesson 2 of 2 · 7 min

Why starting early beats starting big

The same ₹5,000 a month, started ten years earlier, ends far ahead of the later start — and the years, not the extra money, are doing almost all of it.

Two people, same ₹5,000 a month. One starts at 20 and stops at 60. The other starts at 30 and stops at 60. The first puts in ₹6 lakh more — and at a 10% assumed return ends up with almost three times as much.

The reason is that the early money has the longest to compound. Money invested at 20 gets forty years of growth on growth; money invested at 45 gets fifteen.

Work it out yourself

Put ₹5,000 a month in at a rate you choose, for 40 years, then for 30. Compare the two.

SIP Calculator (with step-up)

How does the smaller gap end up so far ahead?

KabirTara

Kabirasking
Hold on. The one who started earlier put in a bit more money in total and finished far ahead. That cannot only be a few extra years.
Taraexplaining
The extra money is not doing the work. The extra time is. Those first few years of instalments sat there the longest, earning on what they had already earned.
Kabirasking
So a rupee put in at twenty counts for more than a rupee put in at forty?
Taraexplaining
Same rupee, different number of rounds. Every year it stays where it is, it gets another round of growth on growth. The earliest ones get every round there is.
Kabirasking
Then why does it feel like nothing is happening for years?
Taraexplaining
Because growth on a small base is small. The bend only shows once the earnings themselves are large — and by then nobody can go back and start earlier. That is the part you cannot buy later.

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Kabir asks

One person puts in ₹5,000 a month from 20 to 60, another the same from 30 to 60. The first puts in ₹6 lakh more and ends with almost three times as much. What explains a gap that size?

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