For many young South Africans, financial priorities such as paying off student debt, covering rising living expenses and supporting family members often take precedence over investing and retirement planning.
However, financial experts say delaying investment decisions can come at a significant cost.
According to Lungile Macuacua, Portfolio Analyst at 1nvest, time is one of the most valuable assets in long-term wealth creation.
“The scarcest resource in building wealth is not capital, it is time. Unlike money, time cannot be earned back later. The earlier you start investing, the more opportunity your money has to benefit from compounding and long-term market growth,” says Macuacua.
Compounding allows investment returns to generate additional returns over time, meaning investments can grow significantly the longer they remain invested.
A practical example highlights the impact of starting early. Two investors each contribute R1,000 per month to a diversified portfolio earning an estimated real return of 4.8% annually. One begins investing at age 25 and continues until retirement at 65, while the other waits until age 35.
By retirement, the first investor could accumulate about R1.45 million in today’s money, compared with approximately R800,000 for the investor who started 10 years later. The delay results in a difference of around R650,000.
Even postponing investment by five years could reduce retirement savings by roughly R360,000.
Macuacua says many people delay investing because they are waiting for a higher income, greater financial knowledge or more favourable market conditions.
“Historically, time in the market has proven to be far more valuable than trying to time the market. The sooner you begin, the greater the potential benefit of compounding over the long term,” she says.
She adds that investing does not require specialist stock-picking skills. Exchange-traded funds (ETFs) offer investors access to diversified portfolios that can include hundreds of companies across multiple sectors and markets through a single investment.
According to Macuacua, young investors should focus on investing regularly, diversifying their portfolios and aligning investments with long-term financial goals.
Accessibility has also improved significantly in recent years, making it easier for South Africans to start investing with relatively small amounts.
Glenn Grimley, Head of Stash at Liberty Group, says one of the biggest misconceptions is that investors need a substantial lump sum before they can begin building wealth.
“Small amounts invested regularly can become meaningful over time because of the impact of compounding,” says Grimley.
He recommends starting with an affordable monthly contribution, automating deposits and selecting investments that match individual goals and risk tolerance.
Financial experts also stress that wealth creation should be accompanied by wealth protection.
Unexpected events such as illness, disability, loss of income or death can have a major impact on long-term financial plans. Products such as life cover, disability cover and income protection can help safeguard financial progress and protect dependants.
As South Africa marks Youth Month, experts are encouraging young adults to begin investing as early as possible, even if they can only contribute small amounts initially.
“The good news is that you do not need to be wealthy to begin building wealth. You simply need to start,” says Grimley.
The message from financial planners is clear: while markets may fluctuate and personal circumstances may change, time lost can never be recovered. Starting sooner rather than later could make a substantial difference to future financial security.
