The Delay Cost of Investing

 Greetings,

We hope you liked our previous post on Education loans in India. In this article we will briefly look at "The Delay Cost Of Investing".

“Lots of people wait around "for the right time". People don't know that there is no such thing as a right time. Time is never right nor wrong. The only negative factor of time is that you can lose it and the only positive factor of time is that you can seize it.”

― C. Joy Bell

Similarly in the investment world, time is as important as money. In fact, time is actually more valuable than money since you can get back lost money but there is no getting back lost time. This is why we need to understand that sitting back and doing nothing has a cost attached to it too and that’s what we’re going to look at in this post.

Delaying your investments because you are waiting for the market to rise or fall is a “fool’s errand.” This is because no one can accurately predict the future and all you’re doing by waiting is eroding your returns in the long run. This is because every minute and every hour that you fail to put your money to work for you, you are losing out on wealth that would otherwise be generating right now.

Let’s use an example to explain this concept of delay cost a bit further. Take an example of 3 different people, who start investing at 3 different ages, say 25, 30, and 35, with a monthly investment of 25000 and a modest annual return of 10%. By the time the first person retires at the age of 60, his investment would be worth more than 100 crores while the second person’s investment would be worth about 60 crores and the person who started last would have around 30 crores. 

That’s a huge difference and not one that you would expect from a 5-year delay. This is because time is the key factor to investing wisely and the more time you have, the longer your investments have to grow. Nelson Mandela was quoted stating “We must use time wisely and forever realize that the time is always ripe to do right.” In our case, doing right refers to doing right with our money and our investments in order to accumulate wealth.

If you look at the third person in our example, they started late but saved 30 crores in 25 years which is not bad. Compare that to the ten year-delay that cost more than 70 crores in delay cost and you realize that he lost more money in ten years than he made in 25. That’s the message we’re trying to get through with this post that it’s more expensive to sit around and do nothing than it is to get up and start investing.

In conclusion, they say “it’s never too late to correct a mistake” but what they don’t tell you and what no one talks about the cost associated with correcting it. Most people invest and save for retirement so they can live a comfortable life, don’t lower the standard of your future by indecisiveness, start investing now.