The Importance of Starting Early: The Power of Compound Interest

Compound interest is when you earn interest on your interest. Instead of just earning a return on your original investment, you also earn returns on the growth your investment has already achieved. Over time, this creates the snowball effect we referred to earlier.

Let’s say you invest £10,000 at a 7% annual return. After one year, you’ve earned £700. But the next year, your 7% return is applied to £10,700, not just the original £10,000. That means the 7% return gives you £749, and so on each year.

Over ten years, that £10,000 turns into over £20,000. Over twenty years? It’s worth more than £40,000. Over thirty? You’re looking at over £81,000, without adding a single extra penny to the pot. This snowball effect is hugely magnified if you also make regular contributions in addition to your initial investment,

The key ingredient here isn’t just the return rate, it’s time. The longer your money stays invested, the more dramatic the results.

When you begin saving early, compound interest has more time to work its magic. This gives early investors a powerful advantage, even if they save less each month. Let’s look at how these benefits are magnified with regular investments. Consider this simple comparison:

James starts at age 30 and invests £500 per month for 20 years, then stops. Total invested: £120,000

Sarah waits until age 45 and invests £1,000 per month for 20 years. Total invested: £240,000

Assuming a 7% annual return, by age 65, James’s portfolio will be worth approximately £775,000, while Sarah’s will be worth approximately £630,000. So, James can accumulate more than Sarah, even though she invested twice as much. That’s the power of compounding.

Starting early also brings a psychological benefit. It creates momentum. You start seeing progress sooner, and you’re more likely to stay engaged with your finances. Having a growing buffer also provides peace of mind, especially during life’s inevitable ups and downs.

Many people delay starting because they feel they don’t have enough to contribute. “I’ll start when I earn more,” or “Now’s not the right time,” are both common mindsets.

But the truth is, waiting is costly. Every year you delay is a year of potential growth you can’t get back. You can always increase contributions later, but you can’t make up for lost time. Even small amounts, £100 or £200 a month, can grow significantly over 20 or 30 years.

Another common excuse is feeling overwhelmed by complexity. For expats, financial planning may involve multiple currencies, tax regimes, or investment platforms. But complexity isn’t a reason to wait, it’s just a reason to get support. The longer your finances remain scattered, the harder they are to manage and grow.

Today’s financial technology makes it easier than ever to take control of your future. You don’t need to be an expert to get started, you just need access to the right tools.

Apps and platforms can help you:

• Track your net worth, across bank accounts, pensions, and investments
• Set financial goals, like retirement savings or property deposits
• Visualise projections, so you can see how your contributions grow over time
• Receive reminders, nudges, and alerts to keep you engaged
• Monitor contributions, even across currencies and accounts

The Hoxton Wealth App offers all these features in one place. Designed with expats and internationally mobile people in mind, it provides a real-time view of your entire financial picture, including multi-currency net worth tracking and goal-setting features tailored to your lifestyle.

Whether you're living in Dubai, moving between the US and Europe, or managing investments from multiple countries, the app brings clarity to your planning so you can start early and stay on course.

As the old saying goes, "The best time to plant a tree was 20 years ago. The second-best time is now." It’s easy to feel behind. But the important thing is to just start. The sooner you act, the more time your money has to grow. Compound interest rewards early decisions, not perfect ones.

If you're in your 30s, now is the time to get organised. If you’re in your 40s or 50s, there’s still huge value in starting today. What matters most is creating a plan that works for you and giving it time to do its job.

At Hoxton Wealth, we help individuals and families build long-term investment strategies, track their progress, and adjust their plans as life changes. With the right tools and advice, starting early doesn’t have to be complicated.

Take the first step today. Explore the Hoxton Wealth App or speak to an adviser to see how you can make compound interest work for you.