The Cost of Delayed Investments
By Akhil Chugh
Date December 04, 2022
Many people pay a heavy price for delaying their investment decisions. What starts with “I am far too young to be worried about investments,” or “I am waiting for the market to stabilize,” often ends up with “I wish I had begun earlier.” We tend to leave investment decisions to tomorrow because we don’t give much thought to the difference it could make.
Usually, we often tend to delay investing thinking that how a few months would not matter much. But the reality is that even small delays can make a huge impact on your wealth in the long term.
The secret to being wealthy is not always making big decisions but also making small decisions like not delaying your investments and starting right now. A few years delay in making your first investment can cause a crore worth of harm to your financial status.
The longer you delay investing, the more money it will cost you. Surprisingly, people think the cost of delaying investing is not as significant of a figure as what it truly is.
As is clear from the illustration below, how a 5-year delay in SIP can cost you Rs 14.9 crores & a 10-year delay can cost you around Rs 23 crores!
The cost of delay in investing is enormous. Even one year can make a huge difference.
“Now” is the best time to begin investing for your long-term goals.
Potential reasons for delaying investments:
- Fear of making a wrong decision: There is a well-known quote that ‘known devil is better than an unknown angel.’ Some of the investors wrongly apply it to their investments as well. Thus, they end up parking their money in banks’ savings accounts or FDs earning less interest than they could earn in mutual funds which have the potential to generate inflation-beating returns.
- Information overload: Too much information is always confusing. With a lot of available investment opportunities in the market, the confusion of picking the right investment avenues is the main reason for delaying the investments especially if you are a new investor. The recommended strategy for novice investors is to start via simple products like SIPs in mutual funds and get professional help to make the right decision.
- Waiting for the right time: The market is more unpredictable than even our weather forecast apps. You can never time your investments in markets perfectly. Waiting for the market’s best days will just erode our returns in the long run. It is strongly suggested to invest regularly through the highs and lows of the market by investing through a SIP in the mutual funds aligned to your life goals.
- Too many figures: For most of us, understanding too many figures can be a tedious task. Like how to estimate the required SIP to accumulate the required retirement corpus, how much to save for a child’s higher education considering inflation, and much more. To make things simple, Net Brokers app has all the financial calculators to make calculations easy for you. Investors can always contact us for more help.
Impact of delayed investments on wealth creation:
Becoming wealthy is a journey and investments are the highways to it. If those investments are delayed due to any reason, our dreams of financial independence will take too long to come true.
Let’s take a look at what happens to wealth creation when the investments are delayed.
Thus, the cost of delayed investments increases with each passing year!
If you start investing early, you don’t need to earn eye-popping rates of returns to accumulate big sums of money. All you need is ‘Time’. When you start investing early, your money has more time to grow due to the magic of compounding.
Start investing today & let the magic of compounding work to help you reach your financial goals!
Key Takeaways from Net Brokers
- ‘Start early to earn more. It is very important to understand the basic rule of investing that ‘time in the market’ is more important than ‘timing the market.’ The later you start, the lesser time you will give your investments to compound, resulting in lower wealth creation.
- Delay in investing can be costly. So, if you are still unsure about investing, avoid making lump sum investments and go for investment in equity mutual funds via monthly SIPs. SIPs help you to average out the cost of investing while ensuring that investors don’t miss out on any good investment opportunity when the market is favorable.
- Net Brokers strongly believe that investing money is far better than holding it in savings accounts. One cannot expect the return from a savings bank account to beat the widespread inflation. Investing in instruments like mutual funds suited to investor’s risk profile and financial goals has a greater chance of beating inflation.
There could be ample reasons behind postponing investments such as people tend to think they do not understand the market, it’s already too late or they are concerned about market volatility, etc. In reality, there is no good or bad timing.
‘Now’ is always a good time to start investing. You only need to act.
Be disciplined & have the patience to reap healthy returns as the magic of compounding unfolds over time!
For more information, get in touch with us today!
Download our mutual fund app & start investing for your long-term financial goals.
Happy investing.