Financial Health Financial Planning OFW Retirement Savings and Investments

How Time Matters in Investing


Time is a big contributor in terms of growing your money.  Starting early has a big impact on the value of your invested money over time.  Let’s illustrate this with the investors below:

Juan, Diego, and Alfredo are triplets.  They’ve just graduated from college and got their first job.

Juan started investing at age 20.  He allots P20,000 per year of his salary to be invested in a mutual fund for 10 consecutive years.

On the other hand, Diego, the happy-go-lucky among the three, focused his 1st 10 years of working on spending with gadgets, expensive shoes and signature clothes.  He only started investing at age 30, following Juan’s pattern of P20,000 per year for 10 years.

Alfredo who loves travelling, only started at age 40 to prepare for his retirement fund.  Since he already had a high salary that time, he tripled the amount and invested P60,000 per year for 10 years.

time importance_triplet investors

Using a 10% rate of return, we can still see that Juan has the highest account value of investment (P5.5M) at age 60 during their retirement.  While Diego, which also invested the same amount as Juan, only got P2.1M retirement fund (not even half of Juan’s fund).  Looking at Alfredo’s, we can clearly see that even he invested 3 times much as of Juan and Diego’s, his retirement fund still not able to reach the account value of Juan.  The difference is mainly due to the gap of years when they started investing.

This is the reason why I would like to instill that even on an early age, investment and saving should already be part of your system.  It doesn’t mean that you’ll deprive yourself today from the things you like to enjoy.  But learn how to balance everything and that spending must be in moderation.  Delaying some items now cannot do you harm, instead, can give you a more rewarding lifestyle in the future.

Let me end this article with one of my favorite stories regarding investing, the “Story of 3 Coins”.

Imagine you are given 3 coins.  One coin represents Knowledge, the other one is Experience, and the last coin is Time.   These 3 are the fundamental needs to achieve financial independence.


However, if I have to take away the coin of Knowledge, do you think you can still fulfill your dream of financial stability?  The answer is YES.  Because you can still grow money and manage it using your Experience and Time.

What if, I return Knowledge, but get the coin of Experience?  Of course you can still move on with life and achieve financial freedom as you have the Knowledge and Time.

This time, you can have both the coins of Knowledge and Experience, but I will remove the coin of Time.  What will happen?  Can you still continue?  Obviously, the answer is NO.

This story only shows that among all of them, TIME is the MOST ESSENTIAL.  Knowledge and Experience is nothing, if you no longer have the Time to use them.


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