Now or Later?

I remember as a kid being asked if I wanted my correction now or later for some deed I’d done which evidently was perceived to be needing correction. My choice was always “later.” But that is because few things in life grow exponentially and correction for dumb deeds done as a child are not one of those things, at least as far back as I can remember.

But thanks to my good friend Joe I’ve learned that exponential financial loss is not something you want to wait until later to understand. Because if you fail to take corrective steps today to rectify this inevitably correction you will suffer more later than you realize now.

You see everybody knows that when you save, purchase bonds, mutual funds, or equities that you experience growth only on how much you have “put in.” The back side of this simple fact is this…when you withdraw or liquidate your bonds, mutual funds or equities you stop the growth of that investment. The same is true on your savings, or certificates of deposit… you only earn interest on the money as long as it stays deposited in your account. Take it out and there goes your interest earnings.

So in life as you save up and then stuff happens. How many times have you needed to liquidate (withdraw) from your investments or savings to meet the needs of what’s happening? Have you ever withdrawn from your emergency fund (the one Dave Ramsey tells you to have stored up for a raining day?) Well every time you do so you add to the exponential loss that universally rewards this type of behavior. That is because of something called the “Time Value of Money.” Once you lose your interest growth due to an early or premature withdraw you essentially start your growth process over again. Now, the time it takes for that interest to begin compounding upon itself again has lengthened the time it will take you to experience exponential growth in that account.



But imagine an account that you could store your emergency cash in (or your investment money for that matter) and still be able to access the same amount of money (or even more) without liquidating your emergency or investment fund? Now you’d have the ability to experience exponential growth through the power of compounding interest without ever having to liquidate your account regardless of emergencies or opportunities. Fact is your account would just continue to grow. And that growth, by-the-way, would outperform anything else that you could ever do with your money over time. As Einstein said, “compound interest is the eighth wonder of the world.”

This is the kind of arrangement which allows for the emergencies that arise in life, while at the same time allows for you to take advantage of the opportunities that come along too… without wiping out your base savings and depleting the compound interest growth taking place there. This is what we teach in our book Rx For Wealth as well as in all our coaching here at Life Benefits, Inc. You see we don’t want you to experience the compounded effects of a delayed correction in your financial plan when you can least afford to do so…after you’ve retired or when you’re too old to work as hard as you can and do today. That’s because some things in life are just better NOW than LATER. And learning the real consequences of conventional savings and investing plans is definitely one of those things which is better to learn about NOW not LATER!

by Tomas McFie

Check out Dr. McFie's latest book: Prescription For Wealth