How many times have you told yourself, “I’ll start saving when I get a better job, or after my next bonus, or once I clear my loan…”? These are common reasons to defer saving that may be costing you more than you realise.
Delayed investing is a key factor that can affect the potential achievement of financial goals. The habit of waiting for the “right time” stops you from getting into action. Let’s understand why this happens, and how you can break this pattern.
Understanding the psychology behind delayed investing
Investment psychology helps us understand why many of us tend to defer saving or investing. Some reasons include:
- Fear of making the wrong decision: People are scared of losing money or choosing the wrong investment.
- Lack of knowledge: Investing sounds complicated, so it feels easier to postpone it.
- Thinking it needs big money: Many believe they need thousands to start, which isn’t true.
- Believing there’s always more time: Those who are young believe that since goals such as retirement are several years away, they can start working towards them later.
Read Also: Impact of Behavioural Finance on Market Conditions
Potential impacts of postponing investments
Procrastination in investing can delay your money growth and can even reduce its potential for long-term wealth-building. This is because of the following:
- Less time for compounding: The earlier you invest, the more time your money has to potentially grow manifold through compounding. Delaying narrows that window.
- Missing financial goals: Delayed investing means more pressure later, whether it’s for buying a house, retirement, or your child’s education.
Why starting small is better than waiting for the ‘perfect time’
There’s no such thing as the ‘perfect time’. The sooner you start, the better it can be. You can start even with small amounts because you have many years of investing ahead. A Systematic Investment Plan or SIP in a mutual fund can be a convenient way to do that. SIPs let you invest small amounts regulary – such as weekly, monthly, quarterly etc. You can start with as little as Rs. 500 generally. Over time and with the effect of compounding, even small amounts can potentially grow to something substantial in the long run.
Read Also: Behavioral Finance: Meaning, Types, and Its Importance
How to overcome mental blocks and start today
- Set a small goal: You can start with as little as an SIP of Rs. 500 per month.
- Use simple platforms: Digital apps make investing easy and beginner-friendly.
- Talk to a financial advisor: Don’t let doubts stop you.
- Don’t aim for perfection: Just begin and learn along the way.
The power of early investing: A quick comparison example
Let’s say:
- Ravi starts investing Rs. 2,000 per month at age 25.
- Anil starts the same amount at age 35.
At age 55, assuming an average return of 12%:
- Ravi will have around Rs. 70 lakhs
- Anil will have around Rs. 22 lakhs
That’s the power of compounding and early action.
Conclusion
Delayed investing can silently eat into you future growth potential. So, don’t wait for the perfect time. Start with what you have and with wherever you are. You’ll thank yourself later.
FAQs
What are the main reasons people delay investing?
People often delay investing because they prioritise immediate gratification over long-term goals, fear loss, lack knowledge or think they can only investing when they have sizeable earnings. Many may also believe that they have plenty of time later to catch up.
How does procrastinating on investing impact long-term financial goals?
It shortens the time your money has to potentially grow, which may make it harder to meet goals.
Is it okay to wait until I have more money to start saving?
It’s better to start small now than to wait. Options like mutual fund SIPs allow you to start investing with just Rs. 500 generally. Delaying reduces the potential impact of compounding on investment growth.
Can starting small with SIPs make a difference in the long run?
Yes. Even a consistent Rs. 500 monthly SIP can potentially grow into a sizeable amount in the long run. For instance, using an SIP calculator, you can see that if you invest Rs. 500 a month in an equity scheme where you expect 12% returns, you can potentially build a corpus of Rs. 1.12 lakh in 10 years and Rs. 4.60 lakh in 20 years. Moreover, you can always increase your investment amount with time.
Calculator’s results are based on your inputs and there is no assurance that returns will be along expected lines.
How do I overcome the fear of starting my investment journey?
Start with small steps. Use apps, seek advice if needed, and remind yourself that doing something is better than doing nothing.
At Bajaj Finserv AMC, we recognise that emotions are the cornerstone of investor behaviour – not just for investors but for investment professionals too. That’s why, behavioural finance is at the heart of our investment philosophy, InQuBe, which combines the Information Edge, Quantitative Edge and Behavioural Edge. By understanding, tracking and monitoring market sentiments and our own investment biases, we seek to make mindful and strategic investment decisions. Get the Behavioural edge by investing with Bajaj Finserv AMC. Read more about InQuBe here.
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