Cost of Waiting

Many people are in the habit of putting off decisions they have to make today. Retirement planning is one such decision that is shoved aside until retirement age is nearing. Ever wondered what putting this decision away is costing you?

Illustration

Rachel and Tara are both 18 years old. Each used a slightly different investment strategy to accumulate an investment fund at age 65. Let's assume an investment compounding growth rate of 10% per annum.

• Rachel starts investing RM1000 annually from age 18, continued this for 10 years then stopped investing. 
• Tara waited 10 years before investing RM1000 annually and continued this for 38 years.

In the end,

• Rachel had invested RM10 000 and her investment is worth RM655 617.
• Tara invested RM38 000 and her investment is worth RM441 536. 

Time is an important factor in any investment. Rachel's money had a longer time to grow because she started investing at a younger age than Tara. Eventhough Tara invested more money at a later age, her money didn't have the time to utilize the magic of compounding interest.