Dear <<First Name>>,
The volatility in the market this summer has been like your favorite rollercoaster—which many of you have visited this summer after a two-year hiatus. Short-term market gyrations elevate near-term anxiety, yet they always appear as a blip in the big picture of long-term investing. Yet the increase in anxiety can lead to paralysis of analysis, aka good old procrastination, which does stymie your long-term investment productivity. This month’s end-of-summer article from our library helps you quantify the opportunity cost of procrastination so that you’ll get back on your plan and make a decision!
As always, thank you for reading these writings each month and providing your comments, thoughts, and questions, which continue to educate and inform me. I look forward to your continuing thoughts.
Sincerely,
Walid L. Petiri
Chief Strategist
Financial Management Strategies, LLC
1330 Smith Avenue. Suite 7
Baltimore, MD 21209
(p) 410-779-1276
(f) 410-779-1302
Some of us share a common experience. You're driving along when a police cruiser pulls up behind you with its lights flashing. You pull over, the officer gets out, and your heart drops.
“Are you aware the registration on your car has expired?”
You've experienced one of the costs of procrastination.
Procrastination is avoiding a task that needs to be done—postponing until tomorrow what could be done today. Procrastinators can sabotage themselves. They often put obstacles in their own path. They may choose paths that hurt their performance.
Though Mark Twain famously quipped, “Never put off until tomorrow what you can do the day after tomorrow.” We know that procrastination can be detrimental, both in our personal and professional lives. Problems with procrastination in the business world have led to a sizable industry in books, articles, workshops, videos, and other products created to deal with the issue. There are a number of theories about why people procrastinate, but whatever the psychology behind it, procrastination may cost money—particularly when investments and financial decisions are put off.
As the illustration below shows, putting off investing may put off potential returns.
If you have been meaning to get around to addressing some part of your financial future, maybe it's time to develop a strategy. Don't let procrastination keep you from pursuing your financial goals.
Early Bird
Let's look at the case of Cindy and Charlie, who each invest $100,000.
Charlie immediately begins depositing $10,000 a year in an account that earns a 6% rate of return. Then, after 10 years, he stops making deposits.
Cindy waits 10 years before getting started. She then starts to invest $10,000 a year for 10 years into an account that also earns a 6% rate of return.
Cindy and Charlie have both invested the same $100,000. However, Charlie's balance is higher at the end of 20 years because his account has more time for the investment returns to compound.
This is a hypothetical example of mathematical compounding. It’s used for comparison purposes only and is not intended to represent the past or future performance of any investment. Taxes and investment costs were not considered in this example. The results are not a guarantee of performance or specific investment advice. The rate of return on investments will vary over time, particularly for long-term investments. Investments that offer the potential for high returns also carry a high degree of risk. Actual returns will fluctuate. The type of strategies illustrated may not be suitable for everyone.
Copyright 2022 FMG Suite
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.
Walid Petiri is the owner of Financial Management Strategies, LLC (FMS), a Registered Investment Advisor established in 2000. He has over two decades of financial experience that covers virtually all areas of finance, from tax, insurance, stockbroker, personal financial planning, and personal banking to corporate credit, business planning, and consumer lending. In 2017 FMS Institutional Services was launched, and he leads the institutional consulting services delivered that include: investment policy preparation, asset allocation, manager search, due diligence and selection, and the design and implementation of diverse and emerging manager programs.
He is a graduate of New Jersey’s Montclair State University with a degree in both business management and finance. Mr. Petiri is a recipient of the Accredited Asset Management Specialist designation from the College of Financial Planning in Denver, Colorado. He has completed the education requirement for CIMA® certification at Yale School of Management.
Mr. Petiri has frequently been heard on WEAA (88.9 FM) as a financial commentator, appeared on WMAR-TV 2 regarding the 2008 & 2009 economic downturn. Mr. Petiri has been interviewed and quoted by CNBC, the Investment News magazine and Bankrate.com, written for the Journal of Personal Finance, The Register, Popular Finance (of China), Minority Enterprise Advocate Magazine, The Wall Street Journal, Aging News Alert, Morningstar.com, USAToday.com, TheStreet.com, Wall Street CheatSheet and publishes a monthly financial advice column called the Foresight.
Walid was featured in SmartCEO Magazine - Baltimore for the 2012 Top Money Managers Wealth Management. A member of Bethel African Methodist Episcopal Church, he is a devoted parent to his son and daughter. Walid serves on the Finance Committee of Associated Black Charities, and on the Board of Directors for the Reginald F. Lewis Museum and has Chaired the Investment Committee. He is also one of the new Directors for National Center on Institutions and Alternatives.
