We often consider the risks of ‘doing’ when it comes to savings and investing, but we rarely consider the risk of ‘not-doing’; the cost of inaction.
With investments in particular, we consider what we could lose, what could go wrong, what we have to go without in order to save something for the future.
The cost of not-doing
Inaction has its own cost, and that cost is in pounds as well as time.
- What could your savings look like in a year if you started saving a little today?
- What would they look like if you didn’t?
The difference is the first cost of inaction.
The risk of inaction
This cost is compounded when we consider investments or factor in savings interest.
When you wait to invest you miss out on laying down those initial savings, but you also miss the time in the market when those investments could have been earning interest or dividends, and therefore growing.
And every year thereafter you miss out on the growth on that growth!
I’m not saying investments always rise, they fall and sometimes they fall hard, but over the long term the ups and downs of ‘something’ will do better than no movement on ‘nothing’.
The difference of the first cost plus the compounded growth on it is the second cost of inaction.
The most expensive cost:
Is Time. The time those savings or investments could have bought back for you.
That might be more time to spend with your family, being able to retire earlier than hoped, time to travel, timeout or being able to reduce your hours for a better work/life balance. How valuable is that to you?
- What is stopping you from acting?
- What do you need to put in place to help you act?
- What one step can you take today to take action?
- Which one purpose would make you want to act?
Money can be replenished, but time can not and that is the third, and most expensive, cost of inaction.