The cost of delay
The single most damaging mistake for a pension investor is to put off starting.
- There will be fewer annual or monthly contributions made to the pension if the term is shorter.
- Perhaps more importantly, the average time that each contribution has to grow is shorter.
The combination of fewer contributions with a shorter time to grow can cause irreparable damage to the expatriate’s dream of a comfortable retirement.
A modest amount invested over a longer time period can generate a larger overall fund than a higher amount invested over a shorter period. The power of compound interest really does favour the investor that starts early.
However – Beware! It can sometimes be a mistake for an expatriate to commit to saving a large amount of money over a long period. This is why the key to this most important of planning decisions is to discuss it thoroughly with people that can give expert advice, tailored to each individual’s unique needs.