Why Start Young

Imagine planting an Iroko tree. The earlier you plant it, the deeper its roots grow, the taller it stands, and the more fruit it bears. Investing works the same way. Time is the most powerful force in compounding wealth, and for young adults, it’s the one advantage you have in abundance. Starting early is not just a good idea; it’s the single most important decision that can shape your financial future.

Let’s explore why beginning your investment journey in your twenties can lead to extraordinary outcomes. We’ll break down the math behind compound interest, debunk myths that keep young people from investing, and show how even modest contributions can lead to financial freedom.

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Let’s look at a simple example of twin sisters:

• Azizah starts investing at age 25, contributing ₦5000/month into a fund that earns 10% annually. She stops investing at age 40 but doesn’t withdraw the money.
• Zainab waits until she’s 30 before investing, contributing ₦5000/month until age 50 at the same 10% yearly return.

On their 55th birthday:

• Azizah will have about ₦8,656,000
• Zainab will have about ₦6,115,000

Azizah contributed for only 15 years (age 25 to 40), while Zainab contributed for 20 years (age 30 to 50) yet Azizah ended up with much more money. Why? Because Azizah started earlier and compound interest was growing her money consistently.

Starting Early Means Taking More Risk (Safely)

When you’re young, you have decades ahead before you’ll need to access your retirement funds. This long time horizon allows you to take calculated risks, like investing in stocks or growth-oriented funds, which tend to yield higher returns over time. If the market dips (goes down), you have time to recover. If it goes up, you benefit from the upswing (increase).

Older investors often shift to safer, lower-yield investments because they can’t afford volatility but young adults can ride out the market downturns and reap the rewards.

Small Contributions; Big Results.

One of the biggest myths about investing is that you need a lot of money to start. That is not true; you can begin with as little as ₦5,000.

Here’s what investing just ₦20,000 every month starting at age 20 can do:

• At a 10% annual return, by age 40 (20 years later), you’ll have over ₦15,190,000 – approximately, 15 million naira!
• That’s from a total contribution of just ₦4,800,000 (20000 x 12 months x 20 years)

That’s triple your money. Now, imagine if you increase that to ₦50,000/month. You’d be looking at over ₦37,970,000 from a contribution of ₦12,000,000 (20 years x 12 months x 50,000). That is the power of compound interest and time. The earlier you start, the less you need to contribute to reach your goals.

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