As I was traipsing through some of my bookmarked blogs the other day, I stumbled upon a very nifty calculator at Its title drew me in: "The Cost of Waiting."

I'm not too fond of waiting, so I clicked out of curiosity. Lo and behold, it was a calculator that demonstrated the value of saving and investing more money now, rather than later.

The numbers tell the story
Let's run through a few examples.

  • If you begin saving at age 45 and invest $5,000 per year for 20 years, earning 10% per year and experiencing 3% annual inflation, you'll end up with an expected $286,375 before inflation, and $204,977 after inflation. If you put all this off for 10 more years and don't begin saving and investing until age 55, in order to end up with the same amount of money, you'll have to sock away nearly $18,000 per year! Yikes! (You could, of course, simply delay your retirement until age 75 -- in that case, you could stick with the $5,000 annual sum.)
  • If you begin at age 25, investing $5,000 per year and earning 10% on it annually, in 40 years you'll end up with $2.2 million before inflation and nearly $1 million after it. Delay your retirement until age 67, as many 25-year-olds today will likely end up doing, and you'll end up with nearly $1.2 million on retirement. Meanwhile, someone who gets her act together at age 45 will have only 22 years to age 67, and will have to sock away $37,648 per year in order to reach the same place -- that seems kind of . impossible.

The big picture
Are you about to bash your 50-year-old head against a wall? Please don't -- all is not lost. Here are some things to keep in mind:

  • You can often save more than $5,000 per year. One rule of thumb is to save and invest 10% of your income, but the more you do, the better off you'll likely end up.
  • Even if you start investing at age 50, you have a good amount of time in which to accumulate wealth. If you can invest $10,000 per year for 20 years, earning the market's historical average return of 10%, you'll end up with more than $570,000 before inflation and more than $400,000 after. Not too shabby, eh?
  • Of course, remember that that 10% return is very hypothetical. Sure, it's the market's historical average. But over the next 10, 20, or 30 years, the market's average annual return is unknown. It might be 8%, 10%, or 12%.
  • One way to earn better returns than that is to carefully select some top-notch stocks or mutual funds. I myself have been putting more money into funds in recent years. It's true that most funds are lackluster, but thanks to our Champion Funds newsletter, along with some other sources, I've found a handful of very promising funds. If you're that 50-year-old investor with $10,000 per year, and you earn just 12% per year, on average, that will up your end result to more than $500,000, post-inflation. If you earn 14%, you'll end up with close to $650,000.

Find good investments
There are plenty of terrific companies out there, too, which might give you outsized returns over the long haul. PepsiCo (NYSE:PEP), for example, has advanced by an annual average of 16% over the past 20 years, as has Procter & Gamble (NYSE:PG). (How they'll do over the next 20 years is unknown, of course.)

Then there are mutual funds. As I explained in a previous article, some mutual funds can really pack a punch. Some can even double your money in five years. The FairholmeFund (FUND:FAIRX), for example, has averaged annual gains of nearly 16% over the past five years, enough to double your money. (Will it do so in the coming years? Stay tuned!) Its recent top holdings included EchoStar Communications, Sears Holdings, Mohawk Industries, Duke Energy, and AnnalyMortgage.

Let us help
We'd love to introduce you to some top-notch funds, via our Champion Funds newsletter, which delivers recommendations and updates each month. Together, the picks of our analyst Shannon Zimmerman have more than doubled the market's return (as of the last time I checked), gaining an average of 19% versus 11% in the same time period. Try the newsletter for free and you'll be able to see all his picks and how well they've done.

Learn much more in these Zimmerman articles:

Here's to a happier portfolio! (And hey -- consider forwarding this article to anyone whose financial future you care about. Just click on the "Email this Page" link near the top of the page.)

The Fairholme Fund is a Motley Fool Champion Funds recommendation.

Longtime Fool contributor Selena Maranjian owns shares of PepsiCo. For more about Selena, view her bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.