Investment Mistake #1: Procrastination
Time is your greatest ally. Once you have decided to get onto the Investment Ship, you are automatically given an ally. Time is an asset. Depending how you use this asset, it can work for you or against you. By postponing your investing, you are not utilizing the time asset.
Time and amount of money required are inversely proportional. What this means is the more time you have, the less money you need to invest. The longer you wait to get started with your investments, the more money you will have to put in to get the same type of return as somebody that started earlier.
Here’s an example: Let’s take three people, Mark, Stacy and Jose. Jose was smart and at age 20 he started investing $100 per month. Stacy started investing $100 per month at age 25. Mark, always waiting for the “right time”, started investing at the age of 35. Assuming 9% return on their investments, and their desire to retire at age 65, how much will have each have if they continue investing $100/month until they retire? (click on graphic to see full size)
Waiting five years to start investing cost Stacy $272,355.82, and waiting ten years to start investing cost Mark a total of $446,309.40. That’s almost half a million dollars (ignoring taxes).
You might be looking for the right time to start investing. The only “right time” to start investing is today. Putting off investing for any reason is going to cost you much more in the long run than getting the timing correct.
Make it automatic — one of the secrets that the government uses to make sure that everybody pays their income taxes is that they have it automatically taken out of your paycheck before you even see it. Once the company sets up payroll taxes for you, there is no more thought that goes into paying the government.
You should follow this system. Make investing automatic. There are many ways of investing and saving automatically. You can have it taken out of your paycheck and automatically invested. You can have a certain amount taken out of a bank account monthly. In the future I will cover this in more detail.
Meanwhile, whatever you do, start your investment plan today.
Thursday, June 28th, 2007 at 6:53 pm