Why you should not delay your investment decision
Investment is one of the key things in wealth management. When we have saving, we shouldn’t just save due to the inflation effect. When it comes to investment, people always want to wait for them to have more capital before investing. Is it right to wait? Let me explain.
First, for me, having cash is dangerous. When we have cash, it will soon be used to buy something. Most of us love shopping. When you see more and more cash in the bank, you will think that you can afford to buy more things. Without realising, it can increase your lifestyle and soon your expenses will increase. If you like to spend, saving money in the bank is definitely not a good idea.
Second, if we do not invest, inflation will eat up the value of our money. Published inflation rate is 2%-4% per year and the real inflation rate can be as high as 7% as prices of things are doubling every 10 years.
Third, early start and late start of investment will have huge impact on our accumulated investment amount. Let’s have a look at this example.
A is planning to invest for his kid education fund when the child was born. He started to invest only RM200 per month, which is equivalent to RM2400 per year for a 10 years’ period. I think everyone can save RM200 per month. After 10 years, he stopped his contribution and let his money grows by itself. Assuming the rate of return is 8% per year, when his child is 20 years old, his accumulated investment amount will be RM 86k +.
B on the other hand, postponed his investment decision for 10 years. He started to invest when the child is 11 years old. However, because he started late, he decided to invest RM 400 which is RM 4800 per year for 10 years. Assuming the rate of return is also 8% per year, when his child is 20 years old, his accumulated investment is only RM 69k +.
Look at the final figures for both!
Why A accumulated RM16k+ more than B even though he invested only half the capital of B? This is what we call the opportunity cost for late start. This example illustrates the impact of early start and late start of investment. It does not matter you start small, the key is to start early.
What if you can start with RM 2,000 per month? What if your rate of return is more than 8% per year? The final figure will be much more. Do you think your life will be easier or more struggling?
Start to invest as soon as possible. Learn how to invest and you shall grow your wealth in no time.
Watch the Youtube video here on this topic.
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