Opportunity Lost

I have briefly mentioned the potential loss of growth and compound interest over the scope of a lifetime.  Let me go into more detail with actual numbers just to drive this point home.  Lets say you are in your 20's or 30's and you have a little nest egg of $5000-$15000 built up in your 401k or Roth IRA.  You are young and think, "we need to buy a house because it's a good investment, all our friends are doing it and houses are just so cheap right now."  You are rushing to get into something and obviously have not saved for a down payment.  The first place you'll look is that little nest egg.  You might be thinking, "well yeah, I'm young I've got enough time to replace or repay a loan from it.  What's the big deal?  It's not that much money?"  So let's pretend that you take $5000 out, because you can do that without penalty to buy your first home.


You have all the intentions of replacing that money as quickly as you can, but instead life gets in the way and something in the new house needs to be fixed, or you have a major medical event when some idiot slams into you on the way to work.  Whatever the reason you go on contributing to your retirement plan as usual, $100/month, but never make up for that $5000 you took out.  Now let's fast forward 40-50 years and see what an impact it made on your overall retirement.  Can you guess?  If you had your money invested in good, solid, old mutual funds with long track records. Not individual stocks or some brand new hot-shot, but old mutual funds.  If you average, what the stock market has averaged over the last 80 years, and have a return of 11.9% on those funds, it could cost you around a million dollars in lost wealth.  That, is the power of interest compounded over a lifetime and if it doesn't make you think twice about 'borrowing' from your retirement accounts then I don't know what will.  Even if do pay the money back, the year or two that it was out of the market could still cost you dearly in unrealized gains compounded over your lifetime.  Half such a loss would turn most people's stomachs.  Please remember when it comes to investing your money, you only get hurt on the roller coaster, if you jump out while it's moving.