Starting early on your investment journey

• The more time you stay invested, the better your returns.
• Small amounts accrue over time to create a portfolio that is dependable.
• Starting your investment journey today is better than waiting for the ‘right time’.

A couple of years ago, Eman decided that she is ready to start investing. She earmarked her savings and identified an advisor who would guide her in setting up her portfolio. However, she decided to wait just a bit because the prices seemed too high at the time. When it seemed like the market was correcting a bit, she was traveling and was unable to start the process. Eman is like many investors who believe they will buy low and sell high by timing their investments just right.

Why the early starter wins

A psychological concept called loss aversion ensures that we avoid letting go of our hand-earned income or savings in order to start investing. Data supports this view. Let’s take for example the performance of global stock indexes between 2011 and 2026, for a 15-year range.

If you had invested AED 10,000 in the index in 2011 – and stayed invested through the downturns of 2015 (-0.32%), 2018 (-8.20%), and 2022 (-17.73%) – your investment would have grown to about AED 35,000. On the other hand, you would have been significantly poorer if you had pulled out your money during any of the downturns.

The earlier you invest, the more time your investments have to be reinvested and earn more for you.

The strategy of starting small, over a longer term

The simple answer to ‘when is the right to invest?’ is in three points:

• Do you have a regular income?
• Are you free of high-profit debt such as card debt?
• Do you have an emergency fund?

If the answer to these is yes, you are ready to invest.

Starting on your investment journey when you are in your 20s means that you have a higher risk appetite to potentially earn higher returns. Essentially this means that you can recover faster from any fluctuations.

Starting late vs. starting early

Imagine two investors with different starting points for their investments:

Investor A starts a monthly contribution of AED 100 at the age of 25 and continued for 40 years. A conservative annualized return of 6% would result in a final portfolio value of AED 198,000.

Investor B starts 10 years later, at 35, with the identical investment strategy. After 30 years, the final portfolio value would be AED 100,000.

Whether you are 25, 35, or older, don’t wait to begin your investment journey. Set your goals and start.