waitingcost.com
Everyone knows they should have started investing earlier. Almost nobody knows what that sentence is worth in dollars.
The 7% default is a reference, not a recommendation.
The gap after 3 years of waiting
On the start-now line, growth overtakes your contributions in year 18. Your balance is $108,528, and more of it now comes from growth than from what you put in.
| Year | Start now | Start delayed | ||||
|---|---|---|---|---|---|---|
| Balance | Contributed | Growth | Balance | Contributed | Growth | |
| 5 | $19,316 | $16,000 | $3,316 | $7,570 | $7,000 | $570 |
| 10 | $45,281 | $31,000 | $14,281 | $28,630 | $22,000 | $6,630 |
| 15 | $82,090 | $46,000 | $36,090 | $58,484 | $37,000 | $21,484 |
| 20 | $134,270 | $61,000 | $73,270 | $100,807 | $52,000 | $48,807 |
| 25 | $208,243 | $76,000 | $132,243 | $160,805 | $67,000 | $93,805 |
Not financial advice
Money you invest earns a return. Over time, that return earns a return too. This is compounding. Your growth builds on past growth, not only on what you put in.
This is why timing matters so much. Start today, and your money has more years to compound. That effect is bigger than most people expect.
The gap above is not only missed contributions. It is the growth those contributions never got the chance to make.
The chart shows two lines. One line starts now. The other line starts after your delay. Both lines use the same inputs, so the only difference between them is time.
Each line also splits into two parts. The bottom part is money you put in. The top part is money that money earned. This split shows how much of your balance came from your own contributions, and how much came from growth.
At some point, the growth part becomes bigger than the contribution part. The chart marks this point. It is worth noticing, but it is not the main story here. The main story is the gap between the two lines.
The rate slider starts at 7%. This is not a prediction, and it is not advice. It is a common reference point for long-term stock market returns, so you have a reasonable place to start.
Real returns move up and down every year. Some years are strong. Some years lose money. No rate is guaranteed, including this one. Try a few different rates and watch how the gap changes.