Comparison
Starting Now vs Starting in Five Years: What the Delay Costs
If the same monthly plan begins five years later but ends on the same date, how large is the difference, and how much of it is money never paid in rather than growth never earned?
The short answer
In this illustrative model the contribution, the assumed return, the timing and the end date are identical, and only the start date differs. Waiting 5 years leaves the plan US$111,425.16 lower after 25 years.
US$30,000.00 of that is money the later plan never paid in. The remainingUS$81,425.16 is growth the earlier contributions would have produced by the same date. It is a model output, not a forecast.
- Who it applies to
- One illustrative monthly plan, run to the same end date from two start dates, where nothing differs except when the contributions begin. It compares start dates, not products.
- What this does not tell you
- It does not establish what any market will do, and it prices nothing the money did during the years it was not invested. The assumed return is entered here, not found, and the figures are nominal — neither is in today’s purchasing power.
Model Opportunity Cost v1.0, from the shared monthly projection the Opportunity Cost Tool runs.
The controlled comparison
One plan is run twice. The contribution, its frequency, its timing, the assumed annual return and the date the plan ends are held identical; only the start date moves. Holding all of that fixed is what allows the effect of the delay to be isolated, and it is also what makes this a controlled model rather than a statement about any real plan.
| Opening balance | US$0.00 |
|---|---|
| Recurring contribution | US$500.00 |
| Contribution frequency | Monthly |
| Contribution timing | End of period |
| Assumed annual return, net of product cost | 6.00% |
| Both plans end | 25 years from today |
| The later plan waits | 5 years |
| Fees, tax and inflation | Not modelled anywhere on this page |
One thing is deliberately not held equal. The later plan makes 60 fewer contributions, because that is what waiting means. Matching the total paid in instead would model somebody who waited and then contributed more, which is a different decision and a different question. The difference in capital is reported separately below rather than folded into the headline.
The 6.00% annual return is illustrative: a number chosen to calculate with, not an expectation, a historical average or a claim about any market. It is applied identically to both plans.
Today against 5 years from now
One plan, one end date, two start dates
Modelled balance over the 25 years to the shared end date, at an assumed 6.00% a year with US$500.00 paid in monthly. The value axis is in abbreviated amounts; every figure is published in full in the table below. Model outputs, not forecasts.
- Starts today
- US$338,144.48
- modelled ending value, from US$150,000.00 paid in over 25 years
- Starts in 5 years
- US$226,719.32
- modelled ending value, from US$120,000.00 paid in over 20 years
The two marked points hold the same figure. US$226,719.32 is where the later plan finishes, and it is also where the earlier plan stood 5 years before the end — the same curve, moved along the calendar. That identity is checked against the model at every one of the 241 months the two plans share, and it holds because both pay in the same amount monthly from an opening balance of US$0.00. Give either plan a starting balance and it stops being true.
- US$500.00 a month
- Opening balance US$0.00
- Assumed 6.00% a year, net of product cost
- Both plans end in 25 years
- No fees, tax or inflation
| Plan | Paid in | Modelled growth | Modelled ending value |
|---|---|---|---|
| Starts today · 300 contributions | US$150,000.00 | US$188,144.48 | US$338,144.48 |
| Starts in 5 years · 240 contributions | US$120,000.00 | US$106,719.32 | US$226,719.32 |
| Difference | US$30,000.00 | US$81,425.16 | US$111,425.16 |
Where the difference comes from
The bottom row adds up, and that is the point of showing it. The US$111,425.16 gap is exactly US$30,000.00 of contributions the later plan never made plus US$81,425.16 of modelled growth those contributions would have produced by the same end date.
73% of the difference is the second term. That is the part a reader cannot recover by paying the same money in later: the missing capital could be made up, but the years it would have spent compounding cannot be, because the end date is fixed.
- Contributions the later plan never made
- US$30,000.00
- 5 years of US$500.00 a month. This rests on no assumption about returns at all — it is 240 payments against 300, and a reader can check it with arithmetic.
- Modelled growth those contributions would have produced
- US$81,425.16
- This rests entirely on the assumed 6.00% a year. It is what the model produces from that assumption, not a return anyone is owed, and at a different assumed rate it is a different figure.
- Difference in modelled ending value
- US$111,425.16
Only the first part is money. The second is the model's answer under one stated assumption, and it is reported separately for that reason rather than folded into a single cost of waiting.
- Each contribution is invested for however long remains until the end date, so the earliest ones are worth the most in the model and the last one is worth what was paid.
- Delaying removes contributions from the front of the plan, which is the end where the remaining time is longest.
- The identity above is an accounting bridge, not a causal decomposition. It shows that the figures reconcile; it does not attribute the outcome to any one variable.
How a like-for-like comparison of two uses of money is constructed at all — the funding rule, break-even returns, and why an accounting bridge is not a causal claim — is set out in How to Compare Two Financial Uses of Money.
A cost is not by itself a reason
This page prices one thing: what a fixed plan finishes at when it starts on one of two dates. It says nothing about what the money did during the five years it was not invested. Money held for a known expense, used to clear a liability, kept as a cash reserve, or simply not available yet was doing something the arithmetic above cannot see and does not price.
A delay has a modelled cost. That does not establish that starting earlier was available, affordable or right for any particular person. Whether the alternative use of the money was worth more than the figure above is a judgement about a specific situation, not an output of a projection — and it is the comparison the calculator exists to let you make with your own numbers.
This page belongs to a wider subject. Explore the Opportunity cost topic to see which UBWHY asset answers which question.
What this comparison does not determine
The figures on this page are outputs of a UBWHY calculation model applied to the assumptions stated above. They are not historical returns, expected returns, the performance of any investment product, or a forecast. The comparison cannot determine:
- future returns, or what any market will actually do
- expected returns: the 6.00% is an assumption entered into the model, not a projection
- that a return arrives at a constant rate, or in the same order, which it does not
- tax of any kind: no wrapper, allowance, jurisdiction or rate is modelled
- inflation, so both figures are nominal and neither is in today’s purchasing power
- fees, which would reduce both paths and are modelled by a different calculator
- what the money did during the five years it was not invested
- whether contributing at all is appropriate for any particular person or circumstance
- that a delayed plan cannot be changed afterwards by contributing more
None of this is financial, legal or tax advice, and no product is recommended, ranked or named anywhere on this page.
Where these figures come from
Both plans are stepped by the shared monthly projection behind Opportunity Cost v1.0 and the Opportunity Cost Calculator, in exactly the configuration that calculator uses. The two runs differ in one input — how many months the plan runs for — and in nothing else. Nothing on this page is typed by hand.
The delayed plan is the model's verified test case OC-4 exactly: 240 monthly allocations of US$500.00 at 6.00%, opening at nothing. That vector is recalculated from an independent implementation on every build, and exact regression tests pin the earlier plan and the difference against the same model.