Thread by @SquareoffIn

⚡️What does a delay in #investing do to your retirement prospects?

Is there cost to investing later on in life?

In investing, considering that it doesn’t show any immediate benefits, it is one of those decisions many of us tend to put off for later

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From low earnings in the initial phase of our careers to higher expenses post marriage, the reasons are many that we fall back on. What little we save often ends up either in just the savings account or at best an FD even for years together.

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We do end up getting our collective acts together later on when concerns for our childs future or a drying up job market force us to think seriously about investing But is there a cost to investing later on in life, rather than earlier?

Let’s let the numbers do the talking

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The SIP is bumped up by 10% each year in all cases with annualized return of 12%.

Someone starting in their 40s with a SIP 5x greater than the 25-year-old and retiring at the same time will have a corpus of Rs 4.65 Cr. That’s about Rs 3.23 Cr less.

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Let’s list down what it tells us.

#1. At 25 investing with just a Rs 5k SIP will accumulate Rs 7.9 Cr

#2. Someone starting in their 40s with a SIP 5x greater than the 25-year-old and retiring at the same time will have a corpus of Rs 4.65 Cr. That’s about Rs 3.23 Cr less

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#3. Delaying investing by 5 years in the case of the 30-year-old has meant a corpus 1.5 Cr smaller.

#4. In the case of an early retirement, only the 25 and 30-year-old investors will have a significant enough portfolio.

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There’s a late fine

The numbers tell us that there are very real consequences to delaying investing. If you have just 10 years less to save for retirement you’d have to start with at least a Rs 20,000 SIP to match the corpus of someone starting at 25 with Rs 5k each month

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The more you delay, the less time you have to compound your investments. Reaching an inflation adjusted corpus that is cost efficient in terms of the actual investment from your side depends a lot on the time you give your investments.

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The inference is clear. Delaying investing costs real money that can’t simply be made up by investing marginally more. You’d have to invest a lot more to match someone who started early. This means greater pressure on your savings to meet the same financial goals.

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So the next time, you consider delaying your investment decision, ask yourself – “Can I afford paying a late fine?”

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