The Best Time of Investment was 20 years Before & The Second Best Time is NOW … !!!!
This is the very old proverb. People always try to time the market. They try to find out the best time of Investment. Some people think that, the best time of investment is when the market is down while some think that it is when the market is reliably stable and going in upward direction only. But well, let me tell you that none of the above thing is practicable possible. Means timing the market and predicting the future movement of the market.
The one and only best time of starting an investment was 20 years ago and the second best time is now. No matter how up or how down the market is. No matter weather there is a recession or economic slowdown. The best time (Sorry Second Best Time) of starting an Investment is NOW.
The reason for starting investment right now is 'The Power of Compound interest.' According to Albert Einstein, The Compound interest is the greatest force in the universe. But it will only work for you if you give more time to your investments. The more time you give to your investments, the more it will grow.
Say for Example, Nancy started investing US $ 1000 in Index mutual every year when she was 25. At the age of 35 she had stopped investing. So Total Investment by Nancy was US $ 10,000. After the age of 35, Nancy has never invested a single penny. Now if we assume the 10% compounded rate of interest than what will be the worth of this investment when Nancy reaches the age of 65? Well, it will be US $ 6,62,024. Now John is lazy. So he had started investing at the age of 35. But to cop up Nancy, John has started investing US $ 2000 in the same Index mutual fund in which Nancy has started investing 10 years before john. Now John has invested US $ 2000 per year from the age of 35 to the age of 65. So John has invested entirely US $ 60,000 over the period of 30 years. Now at the age of 65, the Net worth of John's Investment was US $ 3,63,886. A far cry from Nancy.
This is because of Compound interest. The Compound interest is so powerful over the time that it can multiply your wealth in a breath taking way. only a 10 years of difference can make a huge difference in your wealth. The key of profitable investment is the compound interest. So start investing right now or as early as possible.
And that's why we say that the best time of investment was 20 years before (because if you have invested 20 years back than today the compound interest would have multiplied your wealth in a wild manner) and the second best time is NOW (if you have not invested your money 20 years before because may be you were not born or approaching at that time instead of waste to waste more time now Instead of investing right now and let the compound interest work in favor of you.)