My new series – investing mistakes – is meant to share some of the ways in which us investors hurt our returns. The series is inspired by the investment mistakes I have made over the years. The goal is to help people to invest better by avoiding some of the mistakes I have made or to correct mistakes they have committed. Do share your experiences in the comments if you have any. I hope you enjoy the series.

Imagine that every salary you ever received, apart from the taxes, was in full. That would mean no state pension and no private pension contributions. All your money would be yours to spend or invest as you wish. What do you think would happen in those circumstances? How many people do you think would be able to retire comfortably?

Now this may be only a thought experiment for many of the people reading this blog, but a large section of Ghanaians have no pension plan whatsoever and their hopes of a comfortable retirement depends solely on themselves. Every month they have to put aside a part of their earnings into investments for retirement. Or at least they should. But with all expenses staring at them, how easy would it be to put something away? It is reasonable to assume that they would take care of present problems and postpone retirement savings till a later time.

The significance of this practical problem is to highlight what I believe is one of the hardest things about investing – understanding the importance of time. If there is one thing that can make even the smallest amount matter, it is time.

For example, if you invested GH¢100 per month at an annual interest rate of 5% for 20 years, you would end up with an investment value of GH¢41,103.37. However, if you invested GH¢200 each month and earned 10% a year but invested for only 10 years, you’d end up with GH¢40,969.00. This means that you need double the monthly payments and double the interest rates (which depends on luck) to keep up with a person already invested.

I learnt this the hard way when I first invested an insignificant sum in a mutual fund 10 years ago. After a decade of not even checking my account, I asked for my statement only to realize that my funds had increased by 500%! Now imagine if I had put in some money every month, I could be sitting on quite a handsome figure right now. As an investor, I know that past returns are no guarantee of future performance and that the next decade would probably not result in a 500% return from that fund. I have missed my moment. However, an even bigger mistake would be to take no action. There is always some time!

And that is the lesson I hope people will take from this post. It is unproductive to rue lost returns or a shorter compounding period. Starting today would leave you in a better position than starting tomorrow. Whether you want to purchase mutual funds or treasury bills or other investments, it is important to have time in your corner. And you can do that by forgetting the past and taking control of your future.