The myth
People often wait before investing since they want to save more money first to earn higher returns.
But is it better to wait until you have a lot of money to invest?
The reality
One way to benefit from an investment of any size is through compound interest. After your first investment product matures, you can let your interest earn more by reinvesting both your principal and interest.
Through this cycle, your money has the potential to grow faster. However, if you wait until saving a lot, you will have less time to grow your money exponentially.
Note that compounding interest only works with investments that offer dividends or interest. These include time deposits, bonds, select stocks, and investment funds.
An alternative strategy is to invest smaller amounts on a regular schedule. Spreading out your investments over time can also help minimize risks, especially for volatile assets like stocks.
If you put in a large amount all at once and the prices drop right after you buy, your loss would be more substantial than if you started small.
On the other hand, if you spread out your money, you can invest when prices go down and buy low. Small investments can also make it easier to change course if you decide to place your money elsewhere.
Verdict: It depends.
When you invest a large amount of money, the timing and potential risks of your chosen investment product play a big part in whether you will gain or lose some.
Investing with a large amount of money could bring higher potential returns. You may also get better results when you invest for a long time.
However, waiting until you have more money can mean earning less.
There’s nothing wrong with small but steady investments since they can add up over time. Having a consistent pace will also help you develop good money habits along the way.
