Unit 4 · Level 3 · Pensions & the long game
The cost of waiting
At roughly 7% average annual growth, the rule of 72 says invested money doubles about every 10 years. Start at 25 and a single €10,000 gets four doublings by 65: 10 → 20 → 40 → 80 → 160 thousand. Start at 35 and you get three: it stops at €80,000. The decade you skipped wasn't the first doubling. It was the LAST one, the biggest of all.
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What you get asked
€10,000 invested at 25 grows to roughly €160,000 by 65 (four doublings at ~7%). Your friend invests €10,000 at 35 instead. Roughly what does it reach by 65, in euros?
Three doublings: 10 → 20 → 40 → €80,000. Ten years of delay didn't cost 10 years of growth; it cost half the final pot.
Why does starting 10 years EARLIER matter so much more than contributing more later?
Compounding back-loads its fireworks: the final decade turns €80k into €160k. Only money planted early is still around to catch that last, biggest doubling.
One-off €10,000 at ~7%/year: match the starting age to the rough pot at 65
Each decade of waiting halves the ending pot. Same money, same market, same rule of 72. Only the start date moved.
The 35-year-old starter would need to invest roughly ___ as much money to catch the 25-year-old's result at 65.
Missing one doubling means the pot halves, so catching up demands double the input. Every extra decade of delay doubles the bill again.
You're 35 and never started. What does this lesson mean for you?
The comparison isn't you versus your 25-year-old self; that ship sailed. It's you-starting-today versus you-starting-at-45, and today wins that one by double. 🐜
The rest of this unit
Matches, tax shelters, decades of compounding, and the enemy that never sleeps.