It’s a fact in life that many of the seeds we sow when young create bountiful crops later on. As children, most of us probably completed homework with bad grace, thinking we did so because “the teacher wants it”. What we didn’t realise then – but probably do now – is that the homework was good for us. We learned more, retained more, and ended up all the richer for it.

I use this admittedly simple analogy because it has close parallels with long-term investment. Early in our careers, many of us think we don’t need to worry about investing. It’s the “homework” that, as an adult, we can choose not to do. But actually, just like an education, investing while young will stand by you long into the future.

Where the £174,000 comes in

The reason is that when you invest earlier, you reap the benefits of inflation for much longer – thanks to a life hack called compound growth. It essentially means that investing a small amount at thirty is the equivalent of investing much more at forty-five. Even starting a single year earlier can make a massive difference.

We can see this in action, thanks to a calculation made by our partners Vision Dental Wealth. It uses the premise of two investors saving the same £10,000 each year, at the same 10% growth rate, but with one starting just a year later the other. At year thirty, the investor who started first would have £1,809,434. The runner-up, who started second, would have just £1,634,940. And it’s all down to compound growth – over thirty years, a single contribution of £10,000, expanding each year at 10%, would be worth £174,000.

How you should be investing: age by age

Knowing this creates a unique opportunity to provide for your old-age self. To set you on the right track, Fidelity pose wealth planning benchmarks. Individual circumstances are bound to vary, so this is more of a framework than an attempt at die-hard truth – but by meeting these benchmarks, you could be laying in stores for Future You.

• At 30, aim to have 1x your current salary in savings.
• At 35, have 2x your salary saved.
• At 40, have 3x your salary saved.
• At 45, have 4x your salary saved.
• At 50, have 6x your salary saved.
• At 55, have 7x your salary saved.
• At 60, have 8x your salary saved.
• At 67 (or retirement), have 10x your salary saved.

By starting at thirty, you can slowly accumulate wealth in a way that’s manageable but also provides enough money to meet your retirement goals. It’s a step towards achieving the standard of living you’d like to reach, or maintain, in later years.

If you’re already past thirty, and haven’t saved this amount, don’t worry. Even if you’re older, you can still recover ground. Beginning to invest as soon as you can will allow you to use the time left ahead of retirement, and the potential for compounding this represents, in your favour. Growth will continue to snowball over, say, twenty years – meaning investment remains a strong option.

Get rich slow

How you invest or save your money will vary, but it pays to think about this proactively – simply siphoning cash into a bank account won’t be enough. Savings should be placed into something that will continue to appreciate, as monetary inflation will also continue. By working with a company like Hive, in sync with a financial planner, you can explore many different options, such as tax-efficient pension contributions or investment within a limited company.

Warren Buffett famously told Jeff Bezos that people do not copy his simple investing strategy because “no one wants to get rich slow.”

If you’re ready to explore this, we can help give you a leg up. Just get in touch to arrange an initial conversation. Sooner, rather than later.