Cost of procastination
Posted April 16, 2008on:
Start investing early to gain the benefits of compounding interest. Here, I show to you the comparison between two different womans that I named it as Fara and Aiza ( hanya nama samaran :p) .
Start her first investment at the age of 21 years old thru regular annual contribution of RM1,000 until she reach 30 years old. She didn’t make any withdrawal nor additional investment by age of 30. So, the total investments is RM10,000. Given the average rate of return of 10%, she gained RM117, 941 at the age of 50. See below’s table:
Start her investment 10 years late than Fara that is at the age of 31 years old. She made same annual contribution of RM1,000 until she reach 50 years old. With the total investments is RM20,000. Given the average rate of return of 10%, she gained RM63,002 by the age of 50. See below’s table:
Eventhogh Fara’s total deposits is smaller than Aiza by variance of RM10,000, there’s a huge different in total return of investment by age of 50 years old. See, it’s RM54,938! Thanks to the power of compounding interest who have benefited Fara for investing early! Warren Buffet start his first investing in stock at the age of 11 years old. No wonder he can beat Bill Gates to be the richest man in the world.
Use this calculator to verify the above comparisons. The calculator provides the opportunity to compare three separate scenarios depicting investments made at different age. It shows that the early investment continues to give more return that the late investment.
So, don’t procrastinate! It does cost you forever! Making your money working and growing is all about TAKING ACTION.