Comments on: The Cost of Waiting ONE Year! http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 11 Feb 2012 20:32:19 +0000 hourly 1 http://wordpress.org/?v= By: The Cost of Waiting ONE Year! | AllFinancialMatters | Wade Dokken, Tom Hamlin, Lincoln Collins, etc on Fixed Index Annuities Investments of the annuity | Wade Dokken | annuities,guaranteed withdrawal benefits,lifetime income,index annuities,guarantee of p http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-446086 The Cost of Waiting ONE Year! | AllFinancialMatters | Wade Dokken, Tom Hamlin, Lincoln Collins, etc on Fixed Index Annuities Investments of the annuity | Wade Dokken | annuities,guaranteed withdrawal benefits,lifetime income,index annuities,guarantee of p Sun, 10 Oct 2010 19:07:01 +0000 http://allthingsfinancialblog.com/?p=755#comment-446086 [...] The Cost of Waiting ONE Year! | AllFinancialMatters. [Please leave a comment by clicking here] Share this [...] [...] The Cost of Waiting ONE Year! | AllFinancialMatters. [Please leave a comment by clicking here] Share this [...]

]]> By: Best Self Improvement Blog http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-443826 Best Self Improvement Blog Sun, 23 May 2010 19:43:16 +0000 http://allthingsfinancialblog.com/?p=755#comment-443826 [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...] [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...]

]]> By: PFCoach » Reader Story: Discovering the Power of Compound Interest http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-443250 PFCoach » Reader Story: Discovering the Power of Compound Interest Sun, 11 Apr 2010 13:51:45 +0000 http://allthingsfinancialblog.com/?p=755#comment-443250 [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...] [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...]

]]> By: Reader Story: Discovering the Power of Compound Interest | Stocks! http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-443195 Reader Story: Discovering the Power of Compound Interest | Stocks! Fri, 09 Apr 2010 07:29:01 +0000 http://allthingsfinancialblog.com/?p=755#comment-443195 [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...] [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...]

]]> By: Reader Story: Discovering the Power of Compound Interest | Expert Reviewz! http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-443181 Reader Story: Discovering the Power of Compound Interest | Expert Reviewz! Fri, 09 Apr 2010 02:02:56 +0000 http://allthingsfinancialblog.com/?p=755#comment-443181 [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...] [...] J.D.’s note: It’s always interesting what makes a concept “click” for one person. For Jess, seeing projected returns on a small retirement investment made him see the light about compound interest. I clued into compounding when I saw the cost of waiting one year… [...]

]]> By: Recycled Advice: The cost of waiting ONE year « Road to the Real World http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-441209 Recycled Advice: The cost of waiting ONE year « Road to the Real World Fri, 18 Dec 2009 18:21:52 +0000 http://allthingsfinancialblog.com/?p=755#comment-441209 [...] waiting to save for retirement, it was originally posted in 2006 and you can find the orignal post here. It offers a shocking glimpse of what putting off saving for retirement will cost you in the long [...] [...] waiting to save for retirement, it was originally posted in 2006 and you can find the orignal post here. It offers a shocking glimpse of what putting off saving for retirement will cost you in the long [...]

]]> By: Business & Finance Blogs » Blog Archive » Playing with Numbers: Using Spreadsheets to Learn About Money http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-401712 Business & Finance Blogs » Blog Archive » Playing with Numbers: Using Spreadsheets to Learn About Money Sun, 08 Feb 2009 05:59:01 +0000 http://allthingsfinancialblog.com/?p=755#comment-401712 [...] This “cost of waiting” spreadsheet is based on one from by JLP at All Financial Matters. Remember, even if you’re old like me, it pays to start investing now instead of [...] [...] This “cost of waiting” spreadsheet is based on one from by JLP at All Financial Matters. Remember, even if you’re old like me, it pays to start investing now instead of [...]

]]> By: Playing with Numbers: Using Spreadsheets to Learn About Money ∞ Get Rich Slowly http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-400685 Playing with Numbers: Using Spreadsheets to Learn About Money ∞ Get Rich Slowly Tue, 03 Feb 2009 22:07:05 +0000 http://allthingsfinancialblog.com/?p=755#comment-400685 [...] interest. A spreadsheet makes it clear. Notes: This “cost of waiting” spreadsheet is based on one from by JLP at All Financial Matters. Remember, even if you’re old like me, it pays to start investing now instead of [...] [...] interest. A spreadsheet makes it clear. Notes: This “cost of waiting” spreadsheet is based on one from by JLP at All Financial Matters. Remember, even if you’re old like me, it pays to start investing now instead of [...]

]]> By: Me vs Debt http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-210081 Me vs Debt Sun, 13 Jan 2008 16:46:04 +0000 http://allthingsfinancialblog.com/?p=755#comment-210081 <strong>401(k) Contributions</strong> Right now my 401(k) contribution is at 5% of my gross income. After one year of employment (this May) I will be eligible for 100% match up to 5%. Free money! If you employer offers a match, you sho... 401(k) Contributions

Right now my 401(k) contribution is at 5% of my gross income. After one year of employment (this May) I will be eligible for 100% match up to 5%. Free money! If you employer offers a match, you sho…

]]> By: Paul http://allfinancialmatters.com/2006/05/22/the-cost-of-waiting-one-year/comment-page-1/#comment-206476 Paul Wed, 09 Jan 2008 00:41:42 +0000 http://allthingsfinancialblog.com/?p=755#comment-206476 The amount that retirement-savings takes up of your salary is hugely important. Example... Age 23 (first year out of university earnings) 25k - 2k = 10% of earnings Age 30 (Mid point of career earnings) 50k - 4.3k = 8.6% of earnings One needs to look at the circumstances. We should always try to put money away for our long term future, and it is certain that the longer that money has to invest/appreciate then the less that needs to initial put in, but that is not the same as understanding somebody's entire income and debt portfolio and deciding what is the best structure for them. They may be on a low salary with high debt. It may be best to clear debt then consider the future. It may be best if their career is likely to see a major increase in salary (e.g. trainee lawyer to full paid lawyer) and that they are best structuring their savings to when they can most afford to pay more. The key is understanding that the longer it is left the more you must put in to get the same out as those who put less in earlier, but that does not mean that by waiting you are making a financial mistake - it really does depend on the best use of your resources at the time. The figures are pretty much unquestionable - 10k given 20 years to increase will be worth more than 10k given 15 years... that doesn't mean 10k is always the best financial route. The amount that retirement-savings takes up of your salary is hugely important.

Example…
Age 23 (first year out of university earnings) 25k – 2k = 10% of earnings
Age 30 (Mid point of career earnings) 50k – 4.3k = 8.6% of earnings

One needs to look at the circumstances. We should always try to put money away for our long term future, and it is certain that the longer that money has to invest/appreciate then the less that needs to initial put in, but that is not the same as understanding somebody’s entire income and debt portfolio and deciding what is the best structure for them.

They may be on a low salary with high debt. It may be best to clear debt then consider the future. It may be best if their career is likely to see a major increase in salary (e.g. trainee lawyer to full paid lawyer) and that they are best structuring their savings to when they can most afford to pay more.

The key is understanding that the longer it is left the more you must put in to get the same out as those who put less in earlier, but that does not mean that by waiting you are making a financial mistake – it really does depend on the best use of your resources at the time.

The figures are pretty much unquestionable – 10k given 20 years to increase will be worth more than 10k given 15 years… that doesn’t mean 10k is always the best financial route.

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