Why a delay in starting your SIP journey will cost you in the long run

medium118600493A party hosted by billionaire John Bogle, the founder of Vanguard, witnessed a conversation between two great writers. The late novelist Kurt Vonnegut informed his pal Joseph Heller that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history.Heller responded: “Yes, but I have something he will never have… enough.”Fittingly, Bogle titled his book Enough.In 2004, I had the privilege of meeting a young dentist couple in Vasant Kunj, New Delhi. Recently married and setting up their clinic in an upscale neighbourhood, they had high aspirations but modest savings. Recognising their novice status in investing, they approached me for financial planning. What followed was a journey of discipline, patience and success — a journey brimming with lessons for all investors.Start small, but start for sureBack then, their savings were minimal, and the gap between their goals and financial reality seemed daunting. Instead of being paralysed by the enormity of their ambitions, we focused on saving and investing regularly, however small the amount be.The couple had worked hard and relocated to New Delhi with dreams of establishing their own dental practice and hospital. Before diving into their professional goals, however, they aimed to secure their own home. They were eager to build wealth, and the expectation of achieving financial success quickly was common at the time. Coincidentally, 2004 marked the beginning of a booming real estate market in Gurgaon, which was seeing the rise of marquee projects following the end of a long tech debacle.At this stage, starting with a small SIP (systematic investment plan) of ₹10,000 a month might sound weird, but it marked the humble beginning of their journey. While this amount may have seemed small, it represented a significant saving for the couple, who were still finding their footing and had to prioritise investing heavily in setting up their practice. Naturally, they had many questions and a curiosity about the stock market. However, what worked in their favour at the time was that the amount was too small to purchase any significant stocks, which kept their risk in check during those early days.One of the couple’s most admirable traits was their ability to define what “enough” meant for them. By setting clear boundaries on their financial goals, they avoided the pitfalls of greed and overextension. Many investors, after achieving their goals, succumb to aggressive actions or splurges, often leading to unpleasant consequences during downturns. This was a great quality that also helped me as an adviser to guide them properly.Later, the birth of their daughter marked a new financial milestone. Despite their already stretched resources, they began allocating funds for her higher education as soon as she was born. The power of starting early ensured that small contributions were compounded into a substantial corpus by the time she needed it.I had noticed that SIPs tend to increase by 4.5x if delayed by 10 years. For example, if you invest ₹10,000 per month and need a lump sum when your child turns 18, it makes sense to start the SIP as soon as your child is born. Delaying it by 10 years means increasing the SIP by 4.5x, as the target is now just 8 years away. Fortunately, my clients began their SIP right from the first year.The year 2004 was the time when mutual fund NFOs (new fund offers) started exploding in the market and investors were making almost a 5-10% return in a month. Infrastructure stocks started to rise and ‘India Shining’ became a big theme.Selling financial products became highly rewarding for the distribution community, with many players, especially banks, making it their primary source of revenue. Banks had the advantage of widespread access to retail investors, and given the market performance and absence of any other alternative to make money fast, even average investors started investing big in the stock markets.The blue channels and yellow papers were the primary sources of information, bringing the journey to financial success to the masses. However, many investors falter at this stage. Often, they become overwhelmed by the scale of their goals or chase quick, risky returns. Allocating money becomes tricky with so many investment options to choose from, and initial losses or a bad experience can discourage them from participating in the stock market — the greatest compounding machine of all time.Key insight: Regular contributions, no matter how small, can lay the foundation for significant long-term growth.Starting small does more than just initiate the process; it builds confidence and creates a habit. This approach also aligns well with the idea that investing is not about timing the market but about time in the market.With each passing year, the couple’s initial investments grew, providing a sense of accomplishment and motivation to continue. Let us consider a simple example to understand: medium118600469The table above illustrates how starting small could be meaningful. It shows the amount of money (in ₹ lakh) one would make depending on the SIP and the number of years of investment. The top row of the chart represents the number of years, while the leftmost column shows the amount invested through an SIP in the Sensex.We all know that over the past 30 years, the Sensex has delivered average returns of over 15%, so using that as a baseline, if someone began saving ₹5,000 per month shortly after getting married, they would have accumulated enough by the time their child is ready for college to significantly contribute to their education — if not fully cover it — even in today’s terms.In fact, an SIP of ₹10,000 per month right from the start could build a retirement corpus of approximately ₹3.5 crore in 30 years. Even more impressive, if one could afford to invest ₹30,000 per month for 15 years — say, starting when their child is born — they would be able to fully fund their child’s education anywhere in the world today.Discipline triumphs over temptationThroughout their investment journey, the couple faced countless temptations: flashy stocks, direct real-estate ventures and high-risk products. Living in an affluent neighbourhood like Vasant Kunj, they were constantly exposed to personal advice from clients, family and friends. They even opened a demat account and also booked a shop with assured returns until delivery and guaranteed returns until it was put to rent by the builder in Gurgaon.However, I had strongly advised against these investments. My argument was simple: buying stocks required in-depth analysis of businesses, industries and the economy. It was a full-time profession.Moreover, investing in commercial real estate could be highly risky. There was no guarantee that the builder would deliver the product on time, and the demand for the property might not materialise and it is certain that we are not going to use it for our own purpose. Technically, they were lending to the builder at a small 12% annual rate of interest with the shop as their only upside. These investments were far too risky because the investors could potentially lose all their money.Being convinced by my arguments, they remained disciplined, relying on my advice to prioritise their long-term goals. Allocation to stocks and this one real estate became purely an academic interest. This required resisting not only immediate gratification but also withstanding societal pressures and the allure of “trendy” investments.One of the biggest challenges for novice investors is dealing with these noises in financial markets. Friends, colleagues and social gatherings often become platforms for discussing high returns and speculative opportunities. The couple, however, chose to stick with a plan. They asked thoughtful questions and sought clarity but ultimately trusted the process.Key insight: Everyone requires advice. Good discipline and a trusted adviser can keep you grounded and focused on long-term objectives. medium nocaptionhttps://youtu.be/OCl-z-IXXEE?si=K4epWaTi-bPfSU6vNavigating market cyclesOver the years, the markets underwent multiple cycles of highs and lows. Their portfolio, like any other, experienced drawdowns that tested their resolve. Each challenging phase sparked detailed discussions, where data and experience played pivotal roles in calming anxieties.By 2008, the Global Financial Crisis had plunged the world into turmoil, causing stock markets to collapse. I recall that from January to October 2008, the Nifty fell from around 6,000 to approximately 2,400. Infrastructure stocks were particularly hard-hit, losing nearly 90-95% of their value. It was an incredibly challenging time.The couple had invested in JP Associates in 2006 after a social discussion. This became a point of focus during every review meeting. I was seldom put under pressure to identify such stocks and stay away from vanilla mutual fund investments. I used to stick to the basics as explained earlier.So, this was the first time they experienced the merit of my argument and kept up with the discipline because by now JP Associates, which they bought at ₹415, had fallen to ₹283 after making a high of some ₹520 within no time. Also, the builder had stopped paying them the assured rent, and the project was delayed by 3 years. Thankfully, the allocation to the stocks was very small and also the shop investment was not so large that it actually became more of an academic learning, losing some ₹25-30 lakh in total.We always adhered to a focused asset allocation strategy, ensuring their portfolio stayed balanced and resilient. This approach shielded them from impulsive decisions that could derail their progress. By focusing on diversification and risk management, they were able to weather the market volatility with confidence.Despite the market turmoil at this stage, their portfolio remained largely positive. This was because their investments were primarily through SIPs in equity, along with MIPs (monthly income plans) and FMPs (fixed maturity plans), which were popular fixed-income investments at the time. Even during the worst phase, their portfolio earned about 6% in returns. While some mutual funds had fallen more than 30%, the overall positive performance of their portfolio, combined with their previous experiences, gave them enough confidence to stay the course.Key insight: A well-thought-out asset allocation plan helps investors navigate volatility with confidence. medium118600663SIP vs lumpsum: Which strategy will make you a crorepati faster? medium118600673Early planning pays offFast forward to 2025: their daughter is graduating from a respected medical college, fully funded by their early and consistent planning. This milestone was achieved without compromising their own financial security, a testament to their foresight and dedication.Early planning also instilled a sense of responsibility in their daughter. Watching her parents manage their finances prudently inspired her to value money and plan for her future. This generational impact is often an overlooked benefit of disciplined financial planning.Key insight: Starting early allows time and compounding to work in your favour, especially for long-term goals like education.Today, their practice is driven by passion and a desire to serve society rather than financial necessity. They are comfortably retired, a testament to the power of disciplined planning and prudent decision-making.Defining “enough” is not just about money; it’s about aligning financial goals with life goals. This couple’s clarity allowed them to prioritise experiences and relationships over materialistic pursuits, leading to a fulfilling and balanced life.Key insight: Knowing when to stop chasing more and appreciating what you have achieved is critical to lasting financial peace. mediumhttps://youtu.be/M0vyuwXSuOQ?si=qhhwmgK8Dhq5XkoUPractical learnings for all investorsSeek guidance early: Engaging a trusted financial adviser can provide clarity and direction, especially when you are starting out.Stay the course: Avoid derailing your journey by succumbing to trendy but risky investments.Review regularly: Periodic reviews help align your investments with evolving goals and market conditions.Resist peer pressure: Focus on your unique financial goals rather than comparing yourself to others.Celebrate milestones: Recognise and appreciate the progress you make, reinforcing positive financial habits.Embrace long-term thinking: The rewards of patience and consistency far outweigh the allure of short-term gains.Educate yourself: A basic understanding of financial principles can empower you to make informed decisions and engage meaningfully with your adviser.One last thingThis doctor couple’s journey underscores the timeless principles of disciplined investing, early planning and defining contentment. Their story serves as an inspiring blueprint for anyone looking to build a secure financial future. As we celebrate their achievements, let’s take a moment to reflect on the practical lessons they have shared — lessons that remind us that financial success is less about quick wins and more about sustained efforts over time.In the end, it’s not just about achieving financial goals but also about living a life of purpose and balance. The couple’s story is a shining example of how thoughtful planning and steadfast discipline can lead to not only financial security but also personal fulfilment. For every investor, their journey offers a simple yet profound takeaway: success is a marathon, not a sprint.