My buddy Mike and I have spent countless hours thinking of ways to get this story across to friends and family...and clients!!!! We have talked about the greatness of life insurance, we have compared annuities and mutual funds, we have considered the benefits of stocks.
The story is simple...people you MUST get started. There is not time to wait...check out this simple illustration.
| Year | A | B | ||
| 1 | 2,000 | 0 | ||
| 2 | 2,000 | 0 | ||
| 3 | 2,000 | 0 | ||
| 4 | 2,000 | 0 | ||
| 5 | 2,000 | 0 | ||
| 6 | 2,000 | 0 | ||
| 7 | 2,000 | 0 | ||
| 8 | 2,000 | 0 | ||
| 9 | 2,000 | 0 | ||
| 10 | 2,000 | 0 | ||
| 11 | 0 | 2,000 | ||
| 12 | 0 | 2,000 | ||
| 13 | 0 | 2,000 | ||
| 14 | 0 | 2,000 | ||
| 15 | 0 | 2,000 | ||
| 20 | 62,550.79 | 28,973.12 | ||
| 25 | 91,907.64 | 54,304.23 | ||
| 30 | 135,042.47 | 91,523.93 | ||
| 35 | 198,421.69 | 146,211.88 | ||
| 40 | 291,546.57 | 226,566.42 |
Column A - contributes $2,000 a year for 10 years gaining 8% interest and no contributions for the next 30 years.
Column B - waits 10 years and contributes $2,000 for 30 years gaining 8% interest.
The difference is huge, not to mention that column B will NEVER catch up. Column A contributes $20,000 ($291,546.57), Column B contributes $60,000 ($226,566.42). There are a lot of points that can be made from this illustration but the most salient is the later you start the more you have to contribute.
Think about your 10 closest friends - which one will you be?
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