Delaying your planning

One of the biggest allies of a good financial plan is time. The more you plan ahead, the more time you'll have to accumulate savings, the more time those savings will have to bask in the glow of compounded growth, and the more risk you can take with those savings since longer time horizons can compensate for investment volatility.

But procrastination squanders time, putting your plan, and future, at a disadvantage. Let's look at the classic example of people saving for retirement. Investors A, B, C, and D (who, it might be guessed, are quadruplets that come from a family of low imagination) each invest $5,000 a year for 10 years. The only difference is the age at which each began. Here are the hypothetical-just-for-illustration-don't-sue-me-if-this-doesn't-happen-to-you results:

Age Began Amount
Investor Investing By Age 65
A 25 $787,176
B 35 $346,615
C 45 $168,887
D 55 $83,227


*Illustration assumes 11% annual growth and does not account for taxes.
Even though each person invested the same amount of money, they have monstrously different amounts at retirement. Investor A began when she was 25 years old, and stopped when she was 35. And her nest egg dwarfs those of her siblings (which makes her both popular and unpopular at family gatherings).

A portion of the article from
http://www.fool.com/news/commentary/2003/commentary030611rb.htm