What is the Cost if I delay My Decision to Invest?
One of the biggest (and most costly) mistakes made by potential investors is to delay the decision to invest.
Often the reasons to delay a decision to invest (is this the right move for me now?) seem logical and important but when viewed from a finacial planning perspective are actually flawed; and the delay becomes a financially costly decision.
The most common reasons used to delay purchasing an investment property, to delay the creation of wealth, and to delay becoming one step closer to financial security are;
- Should I do more research?
- Is this the best property available?
- Can I get a better deal?
- Is the price right?
- Are all the details on which I am basing my decision correct?
- What more should I know?
- Should I get better advice?
- Is there something else I should know?
Initially the answer to these questions is "YES" and the decision to delay making a decision is correct but when sound advie is received and we have recieved professional advice form people we trust we still tend to believe that the answer to these questions is "NO". We do not trust the advice we have received from professionals we trust and we continue to ask these delaying questions preventing our investment and costing ourselves MONEY!
It is important to get good advice and the easiest way to do this is to;
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seek professional advice from qualified and experienced consultants that you feel comfortable with; and
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do some basic research on the internet.
So why do these delaying questions continue to niggle in the back of our mind undermining the decision we want to make; the decision we know we should make and prevent us achieving our goals? The reason for this is simple and that is that these questions are valid and have an essence of truth that can never be truely satisifed - in hindsight there is nearly always room for improvement in our decisons and we fear being in this position.
What we fail to fully understand is that no investment or real estate or finacial or research professional has perfect 20/20 foresight! No body know what the future holds! If we accept this fact and make a sound investment based on the best available information in a TIMELY mannor we will generally be substantially better off than delaying the decsion until we have proved to ourself that the decions is the best one for us! To understand why this is the case we need to understand: "What is the Cost if I Delay my Decsion to Invest?"
So What is the Cost if I Delay my Decision to Invest?
The fundamental mistake people make when assessing a delay in an investment decsion is to assume that the financial penalty is incurred during time of the delay or just offset in the future. Is is NOT! The financial penalty for delaying an investment decision is incurred at the end of the investment period, your retirement, the children's education, owning your own home; it is substantially larger than we realised and is hidden in the future. The reason is simple; our investment time frame is generally determined by a future event that can not be easily delayed (retirement, childrens eduation etc) so that by delaying a decision to invest now we are not delaying the achievement of our goal but are reducing the time we have in which to achieve our goal and making the achievment of our goal less likely!
| Delay - | 6 Months | 1 Year | 2 Years | 3 Years |
| Years to Goal | The | Cost | of | Delay!! |
| 10 years | $34,950 | $68,420 | $131,180 | $188,770 |
| 15 years | $53,770 | $105,270 | $201,840 | $290,440 |
| 20 years | $82,720 | $161,960 | $310,550 | $446,870 |
| 25 years | $127,290 | $249,200 | $477,820 | $687,570 |
This example is based on a negative geared investment property purchased for $350,000 and assumes a long term average growth of 9% pa. Different purchase prices and different assumed rates of growth will change the 'Cost of Delay' but not significantly.