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The theory

Time is one of the most important factors in investing. The longer you invest for, the more opportunity there is to benefit from the stock market's long-term growth potential.

Of course, there are no guarantees, but starting earlier - rather than later - can make your money work harder over time.

If you're looking to fix your finances later in life, don't let this put you off. Taking action, no matter your age, is better than doing nothing.

How it works in practice

Petra starts investing £1,000 a year at 25 years old, while Jonathan invests the same amount from the age of 35. By the time they both reach 65, not only does Petra have significantly more money, she also stopped paying in at the age of 55. This shows the impact of starting to invest early rather than later.

This example is for illustrative purposes only. In reality, investment values can fall as well as rise rather than give a steady return. Charges would also apply and reduce any returns. 

The theory

If you find - for whatever reason - that you have a little more money to invest, any extra contributions could make a big impact on your future savings.

How it works in practice

Nakhalar and Joe both pay 10% of their £30,000 a year salaries into a pension at the age of 25. Their salaries go up a little bit each year.

Nakhalar pockets each pay rise, while Joe ups his contributions by 2 percentage points every five years.

By the time 25 years have passed, Joe's now paying 20% of his salary into his pension. This makes a £265,573 difference to his eventual pot.

This example is for illustrative purposes only. In reality, investment values can fall as well as rise rather than give a steady return. Charges would also apply and reduce your returns (the profit on your original investment).

Important information - Investing over 5+ years can help you build long-term savings. But invested money can fall in value too so you may get back less than you put in.

The theory

Markets rise and fall. It's a natural part of investing. History shows that the longer you're invested, the lower the chances that you'll make a loss, although this isn't guaranteed. Invest for just a year and the range of outcomes you might get is potentially very wide. The longer you stay invested, the narrower this range becomes. And the more likely it is that you'll make a positive annualised return (which basically means the average yearly return on your investments once you've sold them).

How it works in practice 

If Sarah invests in shares for one year, she could expect - based on history - an annualised return which ranges from around minus 40% to plus 60%. However, if she invests for five years her likely annualised return narrows to between minus 7% and plus 30%. Stay invested for 20 years and the data show that Sarah's annualised return would range from plus 5% to plus 18%. In other words - the longer she's invested, the more confident Sarah can be that her return will be positive.

This example is based on the S&P 500 (a stock market index that tracks the performance of 500 of the largest publicly traded companies in the United States). Past performance is not a reliable indicator of future returns.