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Lots of people plan to start investing for a long time – without actually getting on to doing it!
That can mean a lifetime of missed financial opportunities.
If someone wants to start buying shares, does it make more sense for them to begin in their twenties or thirties? Or could it still be worthwhile even once they are well into their forties?
Lots of moving parts
The reality is that there is no single correct answer.
Many people think that the sooner one starts investing the better. After one, time can be a force multiplier in building wealth.
The longer the investment timeframe, the more opportunity someone has to use time to help them build wealth.
But life is not always simple. For starters, someone early in their adult life may not have enough spare money to start investing.
I also think experience can help an investor improve their performance, so in that sense investing at 45 (or even later) could mean someone knows better what they are doing than they would have done at 25.
On top of that, we all need to start somewhere.
So even if a 45-year-old wishes that they had started buying shares decades earlier, that is water under the bridge. The good news, as I see it, is that a person can start investing at that age and still build a substantial nest egg.
Taking the long-term approach
For example, imagine they set up a Stocks and Shares ISA, then contribute £20k per year to it.
Let us further imagine that, thanks to a combination of share price growth and dividends, they are able to grow the ISA’s worth at a compound annual rate of 10%.
In 2050, 25 years from now, that investor will be 70. Having started from zero today, their ISA should be worth nearly £1,967,000.
Yes: a 45-year-old with no investments today could be a millionaire nearly two times over by the age of 70 if taking such an approach!
Ruthless focus on quality
A 10% compound annual growth rate may not sound much. But over the course of time it can be quite a challenging target. Share prices can go down as well as up. Dividends are never guaranteed.
So is it realistic?
I think it is. I reckon it helps for someone to take a long-term approach to investing and think very carefully about how to buy into great businesses at the right price. As the price is what the market offers, that can take patience!
As an example, one share I think investors should consider now from a long-term perspective is Greggs (LSE: GRG).
The baker has had a tough 2025 and its share price has suffered.
There have been some own goals, like not optimising the summer product offering for the weather, as well as externally imposed challenges like rising tax and National Insurance contributions. I see an ongoing risk that business rates and tax hikes could eat into profitability given the company’s large estate of shops.
But the value-for-money food offering should have long-term customer appeal. Greggs has carved out a distinctive market positioning, has a strong brand, and has proven its business model.
Over time I think that could potentially be reflected both in the share price and dividends.
