The most important variable in long-term investment success is not how much you invest, not which stocks you pick, and not even your annual return rate. It is time. Starting early gives compounding the runway it needs to do its most extraordinary work.
A simple example makes the point starkly. Imagine two investors, Alice and Bob. Alice starts investing £200 per month at age 25 and continues until she is 65 — 40 years of contributions. Bob delays until 35, then invests the same £200 per month until 65 — 30 years. Both earn 7% annual returns.
At 65, Alice has approximately £525,000. Bob has approximately £243,000. Alice has contributed £96,000 more than Bob (the missing 10 years of contributions), but she ends up with nearly £280,000 more. Alice made £96,000 extra contributions but those 10 extra years of compound growth more than doubled their impact.
Now consider a more dramatic comparison. Charlie invests £5,000 at age 18 and never adds another penny. At 7% annual return, that £5,000 grows to approximately £148,000 by age 68 — a 50-year horizon. Diana, more diligent, invests £5,000 every year from age 40 to 68 — 28 years, total investment £140,000. She ends up with roughly £424,000. But she invested £135,000 more than Charlie. The 22-year head start Charlie had is worth more than many people assume.
The mathematical reason is that the later years of a compound growth curve add more in absolute terms than the early years — but only if you have stayed invested long enough to reach those later years. Missing the first 10 or 20 years of compounding is extremely difficult to compensate for later.
The practical implication: the best time to start investing was yesterday. The second best time is today. Even small amounts, invested consistently from a young age, will outperform much larger amounts invested later.