Key consequences of delay in investing

If you have already decided to invest, you can miss out on good returns by delaying.

Let’s discuss a few key consequences of delay in investing.


Lower Wealth Creation / Accumulation

Example 1: Suppose Mr. A is 21 years old and Mr.B is 41and both of them start investing for their retirement. They invest an amount of Rs. 10,000 per month. for 20 years. Considering the 15% CAGR returns, their money grows up to about 1.5 crores in 20 years.  Now Mr. B is 61 years old while Mr. A is at 41, and if he continues to invest the same amount, by the age of 61 years his returns would be 31.40 crores!!!!

Example 2: Mr X starts an SIP of Rs 10000 per month at the age of 30 years for a period of 30 years, till the age of 60. Mr Y starts a SIP of Rs 15000/- per month at age of 40 for 20 years, till age 60. Both Mr X and Mr Y have invested Rs 36,00,000/-. The value of investment (at assumed 15% return) at age 60 for Mr X and Mr Y would be 6.92 crores and 2.25 crores respectively!!

You will need to invest more

Delay in investment could cause lower returns as you loose on the magic of compounding. You may have to invest more than 2/3 times of your investments to meet your goal.

Risk appetite can change with time

Generally, you have higher risk appetite at the young age when you have a longer time period to stay invested. With the passage of time, your responsibilities also grow and financial planning may suffer in the future. So it is recommended to invest at the young age so that the returns could be higher at the time of requirements.

Expense priorities change too

Your future expenses partly depend on your current financial plans and change of income in the future. Rising inflation lowers down the value of rupee over the period of time. Also your expense priority would change according to changing lifestyles and necessities.

Missing on saving vs. investing benefits

Savings may be good options for immediate or short term plans. Your money grows at certain rate of interest which can be withdrawn according to your short term needs. But investing your money for long run makes it easier to achieve your goals which may seem difficult by just savings. Investing can beat inflation often delivers much higher percentage of returns than savings do. Yes, it does involve risk but if invested early and correctly, the potential returns may help you enjoy the bigger returns for your goals.

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