Start Investing as Early as You Can

About few weeks ago, I had a conversation with my friend as young as I am (read: turning 27 this year) and shared to her about investment ideas. I am glad that I encouraged her to invest now. But when we are about to end our meeting, she told me, “Jacqui, sana pala matagal na tayong nag-invest. Sana nalaman natin ito nung una tayong nagtrabaho.” Whoa. 

I already heard this many times including myself saying the exact words. I told her, “What matters most, you took the urgency to invest now. It’s not yet too late.” But for some, they chose to spend whatever they have now and will try to invest if they have excess money. 

Spending your money should be a wise decision, buy something that really gives you value. Something that appreciate in value. 

Let me tell you a story about two friends named Tim and Tammy. At age 22, Tim was earning P8,000 a month but after learning about the principle of saving 20% of his income, he decided to save P1,600 a month. A total of P20,000 a year. Being a financially wise man, he invested it in a place that gave him 12% interest per year. Tim saved P20,000 every year until he reached the age of 27. 

One day, he saw Tammy. The girl whom he has been dreaming about and they have the same birthday. Tim discovered that Tammy didn’t save, so he encouraged her to do what he was doing. So Tammy also started saving P20,000 a year at age 28, putting her money at the same place where Tim invested his—earning 12% interest a year. The two of them exactly saved the same amount for six years. Since Tim and Tammy worked as lay missionary in China and couldn’t saved anymore. 

At the age of 62, they came back to the Philippines for good. Tim and Tammy decided to get married and they thought they don’t have money. But they remembered they saved money years ago. So they marched to the office where they invested their money. Tammy was the first to inquire about her money, the guy in the computer said, “My records show that you have P4.8 million.” Tammy fainted. 

When she recovered, she told Tim, “You’ll probably have the same amount of money.” Tim asked the guy how much his money now. The guy said, “According to my records, you have P9.6 million.”  Tammy said, “That’s impossible. We put the same amount of money. Why is his money double that of mine?”

The answer came, “Because Tim saved six years before you did.”And so Tim and Tammy had a grand wedding and lived happily ever after.

 Here’s the table of computations for Tim’s and Tammy’s investments:

             What’s the lesson of this story: 

             Here it is: Don’t get married at 62. I’m kidding.

             There are actually two very important lessons in this story:

             Lesson # 1: The earlier you save, the better.

             Lesson # 2: You need to know where to invest your savings. 

Banks are good places to put your emergency funds and business funds. But never put your retirement and long-term savings there. It won’t work.

I always believe that is not about how much money you make but how much you save and invest that matters most. I salute my sister, Jenny and her friend who started to invest at a very young age of 20. And also, some of my classmates, friends and loved ones, who are now in charge of their finances. Kudos to all of us! 

How about you, when will you be in charge of your finances?

Don’t wait when you have excess money. Invest now because your greatest ally is time.