The Cost of Waiting to Invest

Most people know they should invest. Many plan to start when they earn more.

The numbers say start now with less.

Two savers

Ana invests $300 a month from age 25. Ben waits until 35 and invests $300 a month too.

Both earn 7% and stop at 65.

Ana ends up with about $787,000. Ben ends up with about $366,000.

Ana put in $36,000 more than Ben. She finished with $421,000 more.

Catching up is expensive

For Ben to match Ana he needs to invest about $645 a month, not $300. Ten years of delay more than doubled the monthly cost.

Wait until 45 and the figure is roughly $1,500 a month.

Why this happens

The last ten years of compounding do the most work. Delaying removes those years from the end of the curve, not the beginning.

A dollar invested at 25 has 40 years to grow, and at 7% it becomes $15. A dollar invested at 35 becomes $7.60.

Starting small

If $300 is out of reach, start with $50. The habit matters more than the amount.

Raise it with every pay rise. The retirement savings calculator lets you model a yearly increase.