What does waiting cost?
Two savers put in the same amount every month until the same date. One starts now, the other waits. Compound interest does the rest: money invested earlier has longer to earn returns on its returns.
Paid in at the start of each month.
Start now
SAR 1,518,240
- Paid in
- SAR 370,000
- Growth from returns
- SAR 1,148,240
Start in 10 years
SAR 619,270
- Paid in
- SAR 250,000
- Growth from returns
- SAR 369,270
The cost of waiting
SAR 898,970
Waiting 10 years costs SAR 898,970 by the end.
To end level, the later saver would need SAR 2,570 a month.
76% of the early saver's final value is growth, not money paid in.
- Start now
- Start in 10 years
- Start now: paid in
- Start in 10 years: paid in
Move along the chart, or use the arrow keys, to read each year.
How it works
The same sum with your numbers, step by step.
The monthly rate that compounds to the annual return
i = 1.08^(1/12) − 1 = 0.006434 (0.6434%)
The starting amount grows for the whole period
10,000 × 1.08³⁰ = 100,627
The monthly amounts grow as regular payments made at the start of each month
1,000 × ((1.006434³⁶⁰ − 1) ÷ 0.006434) × 1.006434 = 1,417,613
Start now: the total after 30 years
100,627 + 1,417,613 = SAR 1,518,240
Start later: the same sums over 20 years
10,000 × 1.08²⁰ + 1,000 × ((1.006434²⁴⁰ − 1) ÷ 0.006434) × 1.006434 = SAR 619,270
The cost of waiting: the difference
1,518,240 − 619,270 = SAR 898,970
Where this appears in the CME
Compound interest and the cost of delaying saving are in CME-1A, chapter 10 (Financial advice). The workbook's example: USD 1,000 a year at 5% grows to about USD 126,840 over 40 years, but only USD 69,761 if saving starts ten years later.
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