Time is your greatest investing advantage
When most people think about investing, they think about money.
How much do I need?
Am I investing enough?
Should I wait until I earn more?
But there’s another factor that often has an even bigger impact over the long term: time.
The earlier you start investing, the more opportunity your investments have to grow, and for any returns to potentially generate returns of their own. This is known as compounding, and while it isn’t guaranteed, it’s one of the key reasons many long-term investors focus on consistency rather than trying to invest large amounts all at once.
Why time matters
Imagine two people who both want to invest towards a long-term goal.
One starts today with a small recurring investment. The other waits a few years until they feel they have more money available before getting started.
Even if the second person invests more each month, the first investor has given their money something that can’t be replaced: more time in the market.
That’s because any investment returns have the opportunity to remain invested and potentially generate further returns over time. While markets move up and down and returns are never guaranteed, time can help smooth out some of the short-term ups and downs that investors experience.
Small amounts can build into something meaningful
A common misconception is that investing only makes sense if you have thousands of dollars ready to invest.
In reality, building an investing habit often starts much smaller.
Whether it’s investing a little each week or setting aside a regular monthly amount, consistency can help you make progress towards your goals without needing to make big financial decisions every month.
The amount that’s right for you will depend on your personal circumstances, budget and goals. The important thing is choosing an approach that’s sustainable over the long term.
Consistency over perfection
It’s easy to feel like you need to time the market perfectly or wait for the “right” moment to invest.
In practice, many long-term investors focus less on finding the perfect day and more on building a routine they can stick with.
Markets will rise and fall over time. Investing regularly means you’ll buy when prices are higher and when they’re lower, rather than relying on trying to predict what markets will do next.
For many people, consistency is easier than perfection.
Make investing part of your routine
One way to remove some of the emotion from investing is to automate it.
Setting up a recurring investment means you don’t need to remember to transfer money each time. Instead, investing becomes another part of your regular financial routine.
If you’re investing towards multiple goals, separating those goals can also help you stay motivated. Whether you’re planning a holiday, thinking about a future home deposit or investing for another long-term goal, giving each goal its own place can make your progress easier to track.
Every journey starts somewhere
You don’t need to have everything figured out before you begin investing.
Many experienced investors didn’t start with large balances or perfect knowledge. They started by building a habit, learning along the way and giving themselves time.
While no investment outcome is guaranteed, time is one of the few advantages that’s available to everyone. The earlier you begin building consistent investing habits, the more opportunity your investments have to grow over the long term.
Ready to build your investing habit?
If you’re already using Raiz, consider reviewing your recurring investments or creating a new Jar for your next goal. Small, consistent steps today could help keep you moving towards your long-term goals over time.
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Important Information
This blog has been issued by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) as Responsible Entity of the Raiz Invest Australia Fund (ARSN 607 533 022) and has been prepared without taking into account your objectives, financial situation or needs. Before acting on such information, you should conduct your own review or consult a financial advisor before making a decision to invest. Please read the relevant Product Disclosure Statement and any associated reference documents before making an investment decision. In accordance with the Design and Distributions Obligations, we maintain Target Market Determinations for our Funds. All documents can be found on the Raiz website www.raizinvest.com.au, or calling the Customer Support team on 1300 754 748. Please note that past performance is not a reliable indicator or guarantee of future performance. Historical returns, forecasts, and market commentary are provided for general informational purposes only. All investment carries risk and may result in loss of capital.
