The Godfather Part II has been called one of the greatest movies of all time. Not an easy feat when you consider the original took home 3 Academy Awards, including Best Picture. Part II came out quickly, just 2 years after the first and garnered six Oscars, and was the first sequel ever to win Best Picture. Godfather Parts I and II are considered by many to be among the best films ever made, and the inspiration for an entire genre of film.
Sixteen years later, Godfather III came out to critical reviews and went to sleep with the fishes.
SO, WHAT HAPPENED?
There are a number of reasons cited for it’s failure, including the authors death and the cast and directors not wanting to reprise their roles. But the most critical factor was timing. By the time the actors, director and script were lined up and the film was finally released, the magic was gone and the film bombed.
Godfather III is not the first delayed sequel, nor is it the worst (arguably) sequel ever made. Typically, the longer the delay to get to market, the lower its level of success. Success in investing can parallel this experience. Time matters.
DELAYED SAVINGS = BADA BING LESS BLING
EXAMPLE 1- LUMP SUM
Consider a 30 year old investor investing $10,000 for retirement at an 8% average return. Starting today that $10,000 will grow over the next 35 years to $147,853. Waiting a year to invest will reduce the final amount by over $10,000, more than the original contribution. Holding off 5 years to invest decreases it by almost $50,000. Waiting a Godfather III (16 years) decreases your total amount by about 70%, to $46,609.
EXAMPLE 2 – REGULAR CONTRIBUTIONS
Time has an even greater impact on the results of regular contributions. Starting a $200 monthly investment contribution can yield huge returns if you can maximize the time spent compounding. Over 35 years, the monthly contributions will result in a total of over $450,000. Waiting just one year reduces that amount by over $37,000 to $421, 332.
| 30 Year Old Investing $10,000 @8% to 65 | 30 Year Old Investing $200 Monthly @8% to 65 | |
|---|---|---|
| Starting right away | $147,853 | $428,528 |
| Waiting 5 Years | $100,626 | $281,720 |
| Waiting 10 Years | $68,484 | $181,805 |
| Waiting 20 Years | $37,721 | $67524 |
The benefits of compounding gains, particularly the longer you are invested (even one extra year) can lead to returns that can mean the difference between a good retirement and a great one. Don’t delay the release of your retirement – make sure it’s a hit by starting early.