By contrast, Jack also tries planting avocados, a slower-growing crop that initially isn’t initially very popular. However, their nutrient-rich, creamy texture eventually earns them widespread appeal, transforming them into household favourites. In the same way, value stocks may take time to shine, but their long-term potential often makes the wait a potentially worthwhile one. By planting both, Jack creates a farm that is both resilient and productive over the long term. 

Like all crops and plants, investment returns take time to grow, so starting early can help you reap greater rewards in the long run. By investing your money in stocks and other assets, compounding allows you to earn returns on your returns.

Here’s how compounding works: Suppose you start investing at age 25, contributing $200 a month into an investment that earns a 6% annual return. Meanwhile, your friend starts investing in the same plan at the age of 45 but contributes $400, which is twice your amount. By the time both of you turn 65, you’ll both have invested the same total amount: $96,000. However, your investment would have grown to around $398,298, while your friend’s would only reach around $184,816, despite contributing twice as much every month. That’s because you gave your investment more time to compound, allowing interest to accumulate over the years.

Since time is on your side, make it your greatest ally by starting to invest early. Give yourself an early head start, and watch how compounding can transform even small savings into something much greater over time.  

How about Temasek?

To manage risks and deliver sustainable returns over the long term, Temasek diversifies its investments across geographies and sectors. While focusing primarily on equities, the company also maintains exposure to other asset classes. Its portfolio includes a mix of both public and private market assets. 

Key segments include global investments in companies that are either emerging or established market leaders; strategic engagement with its Singapore-based portfolio companies (primarily blue-chip firms); and co-investments with partners, as well as investments in funds and asset management companies.