After reading the subject line, your first thought was probably taxes, or maybe the economy or the kind of market we’re in – am I right? The actual answer might surprise you – it’s procrastination. There is nothing that has a bigger effect on your future wealth than waiting or delaying. You’re no doubt familiar with the magical effect of compound interest and time, but today I hope to really illustrate what a difference even a small amount of delay can make. I hope you can overcome the truism of Mignon McLaughlin, “There are so many things that we wish we had done yesterday, so few that we feel like doing today.”

What’s the Big Deal with Waiting?

In short – massive amounts of wealth. But we have so many good reasons for procrastinating! Next year I’ll be able to save more money, or I’ll be able to lower my expenses next month, or I should be getting that raise I’ve been waiting for soon and I can save the difference. Whether those things happen or not, the best time to be thinking about your financial future and making plans is today! Actually it was 10 or 20 years ago, but the second best time is today! If this is the only newsletter you actually read, or you actually take action now, it will have been worth all of my effort – procrastination will rob you of more wealth than the worst markets or the most crooked deals.

Here are a couple short illustrations with numbers to show my point, borrowed from the excellent book The Truth About Money by Ric Edelman:

  • If you are 20 years old (and I realize very few of us are) and you want $1,000,000 by the time you’re 65, you would need to invest only $13,720 today (assuming no taxes and a 10% appreciation rate). Using those same assumptions, a 50-year-old would need to invest $240,000! Even waiting 10 years, until you’re 30, would mean investing almost three times as much – $35,580.
  • Maybe you think that of course 10 years would make a big difference, but what harm could waiting until next year do? If a 30-year-old saved $100 per month until they were 65 and earned 10%, that account would grow to $379,664. Waiting just one year to start would result in an account of $342,539 – a difference of $37,125!

If you’ve been waiting to speak with someone about your finances or investing, please take action today. Whether it’s me or someone like me, a short meeting with a financial advisor will cost you an hour or two of your time but could result in a different of hundreds of thousands of dollars down the road. Don’t wait!

A Grab-Bag of Links

Looking at new problems in housing, scary technology, worries from my worry closet and building an Internet business:

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