What is the danger of starting investments late?
You pay a heavy price by waiting to start investments: this post shows the effects of every year of delay
You pay a heavy price by waiting to start investments: this post shows the effects of every year of delay
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We will extend the concept developed while calculating for a traditional retirement goal and show what happens when investments are delayed. There may be many reasons for starting investments late like
We will use the example from this post where a SIP value of ₹ 29,777 is found for retirement 20 years away and ₹ 30 lakhs of starting lump sum amount.
We will see what happens for each year of delaying investments for the next ten years. We assume that every year the starting expense of ₹ 6 lakhs increases at the same 7% inflation as in the example.
Related:
Inflation: the impact on your goals and how to choose assets that beat it
If there is one year of delay, the SIP requirement jumps by 15% to ₹ 34,218 and then to ₹ 39,300 (32% increase) if the delay is just 2 years. If the delay is 10 years, then the SIP amount jumps more than 4 times to ₹ 1.20 lakhs. This is the cost of starting late.
Join the Arthgyaan WhatsApp community: You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.This table shows the different SIP amounts for every year of delay or increase in the amount required in the first year of investment (increasing at 7% a year). For example, if the starting investment is ₹ 9 lakhs and 14 years is left to retirement then the SIP amount will be more than ₹ 68,000.
This should convince every reader that there is a lot of benefit in starting investments as early as possible. It is easy to do as shown here:
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This post titled What is the danger of starting investments late? first appeared on 27 Jun 2021 at https://arthgyaan.com