The Cost of Waiting: What Delaying Your Child’s Nest Egg Really Costs

Few parents decide not to invest for their kids. They decide to start later: after the daycare years, after the next raise, after the market calms down. Waiting feels free, because nothing leaves your bank account while you wait. The cost is real, though. It just shows up years later, as growth your child never gets.

Here’s the short version. At a hypothetical 7% average annual return, $100 a month invested from birth grows to about $42,100 by age 18. Start the same $100 a month at age 10, and you reach about $12,700. Waiting saves you $12,000 in contributions and costs your child about $29,400.

This deep dive, part of our Ultimate Guide to Building a Generational Nest Egg for Your Child, runs those numbers every way that matters: year by year, after inflation, against nearly a century of real stock market returns, and in terms of what it takes to catch up. If your child is already 10, or 15, you’ll also see why starting now still pays off.

Birth vs. age 10: the core comparison

Picture two families, each with a newborn. Both plan to invest $100 a month until their child turns 18. The first family starts right away. The second waits until their child’s 10th birthday. Both earn the same hypothetical 7% average annual return, compounded monthly, with no fees or taxes.

Hypothetical example: $100 deposited at the end of each month through age 18, a 7% average annual return compounded monthly, and no fees or taxes. Today’s dollars assume 3% annual inflation. Not a prediction or guarantee.

The early starter puts in 2.25 times as much money but ends up with 3.3 times the balance and 6.6 times the investment growth. Nearly half of the birth-to-18 balance is growth the family never had to set aside from a paycheck. For the late starter, growth makes up less than a quarter of the balance.

The reason is how compounding works over time. The Rule of 72, a rule of thumb explained on the SEC’s Investor.gov, estimates how long money takes to double: divide 72 by the annual return. At 7%, that’s a little over 10 years. So a dollar invested at birth has roughly doubled by age 10 and is well on its way to doubling again by 18. A dollar first invested at age 10 doesn’t get even one full doubling before it’s needed.

Why this article uses 7%

The S&P 500, with dividends reinvested, compounded at about 10% a year before inflation from 1928 through 2025, based on historical return data from NYU Stern professor Aswath Damodaran. We use a more conservative 7%, the same assumption as the rest of the GoodNest library, to allow for fees, a gradual shift toward bonds as college approaches, and the possibility that future returns will be lower. The conclusion doesn’t hinge on that choice. At 5%, the birth starter still finishes with about 2.9 times as much as the age-10 starter, and at 9%, about 3.7 times as much. Higher returns make waiting more expensive, not less. To test your own numbers, try the SEC’s free compound interest calculator.

What each year of waiting costs

Age 10 isn’t a cliff. The cost of waiting builds a little every year, as the chart below shows. Each bar is what $100 a month becomes by age 18 for a given starting age, split into the money you put in and the growth it earns.

• Your contributions
• Investment growth

Hypothetical: $100 deposited at the end of each month from the starting age until 18, a 7% average annual return compounded monthly, and no fees or taxes. Not a guarantee of future results.

Show the numbers

Start at	Deposits	Balance at 18	Growth	Today’s dollars
Birth	$21,600	$42,092	$20,492	$24,725
Age 2	$19,200	$34,526	$15,326	$20,281
Age 4	$16,800	$27,918	$11,118	$16,399
Age 6	$14,400	$22,146	$7,746	$13,009
Age 8	$12,000	$17,105	$5,105	$10,047
Age 10	$9,600	$12,702	$3,102	$7,461
Age 12	$7,200	$8,856	$1,656	$5,202
Age 14	$4,800	$5,497	$697	$3,229
Age 16	$2,400	$2,563	$163	$1,505

Today’s dollars assume 3% annual inflation over 18 years.

Two patterns stand out. First, growth shrinks much faster than contributions. Starting at age 6 instead of at birth cuts your contributions by a third but cuts your investment growth by more than 60%. Second, the earliest years are the most valuable. Skipping just the first year saves you $1,200 but costs about $3,900 by age 18. Skipping the year from age 10 to 11 still costs about $2,000.

You can also follow a single dollar. At 7%, a dollar invested at birth grows to about $3.38 by age 18. Invested at age 5, it grows to about $2.41; at age 10, to about $1.72; and at age 17, to just $1.07. The dollar that goes in first ends up worth more than three times as much as the one that goes in last.

Even a few months matter. When the Treasury Department and the IRS wrote the rules for the new $1,000 Trump Account deposit, they used historical U.S. stock returns to measure the benefit of letting families claim it soon after birth. For babies born from 1926 to 2007, the median difference at age 18 between $1,000 invested at birth and $1,000 invested six months later was about $300, according to the proposed regulations. That’s a gap worth 30% of the original deposit, created by six months of waiting.

What inflation does to the numbers

The balances above are in future dollars. Eighteen years of rising prices will shrink what they can buy, so it helps to translate them into today’s dollars.

From 1928 through 2025, U.S. consumer prices rose about 3% a year on average, based on the Minneapolis Fed’s historical CPI data. That’s above the Federal Reserve’s 2% long-run inflation goal, which the Fed measures with a different price index, and close to recent experience: consumer prices rose 3.4% over the 12 months ending in August 2026, according to the Bureau of Labor Statistics. Using 3% a year:

• The birth starter’s $42,100 at age 18 would buy about what $24,700 buys today.
• The age-10 starter’s $12,700 would buy about what $7,500 buys today.

Inflation shrinks both balances by the same proportion, so it doesn’t rescue the late starter. The gap between them is still about $17,300 in today’s dollars. What inflation does change is how hard your money has to work just to hold its value. A 7% return with 3% inflation raises your purchasing power by only about 3.9% a year. Keep in mind that our 7% is a return before inflation. Historically, stocks have earned close to 7% a year after inflation, and about 10% before it, so the assumption is deliberately cautious.

To make that concrete, the College Board puts average published tuition and fees for in-state students at public four-year colleges at $11,950 for 2025–26. If tuition simply keeps pace with inflation, the birth starter’s fund would cover about two years. The late starter’s would cover less than two-thirds of one year. Tuition doesn’t track inflation exactly. At public four-year schools, it fell 7% after inflation over the past decade but roughly doubled after inflation over the past 30 years, according to the College Board’s full report.

Parking money in savings is waiting, too

Some parents do set money aside from birth but keep it in a bank savings account until they feel ready to invest. For an 18-year goal, that choice carries a large cost of its own. The FDIC’s national average savings rate was 0.38% in early September 2026, as reported by Fortune. At that rate, $100 a month from birth would reach about $22,400 by age 18, roughly $19,700 less than the same deposits invested at 7%. After 3% inflation, it would buy about what $13,100 buys today.

High-yield savings accounts paid far more, up to 4.50% at the time, but those rates rise and fall with Federal Reserve policy. Over the long run, cash has barely outpaced inflation. In Damodaran’s data, three-month Treasury bills, a common stand-in for cash, returned about 3.4% a year from 1928 through 2025, compared with roughly 3% inflation and about 10% for stocks. Cash is the right home for money you’ll need soon. For a goal that’s nearly two decades away, it has historically been an expensive place to wait.

Does the math hold up in real markets?

Real markets don’t deliver a smooth 7% a year. The S&P 500 lost money in 26 of the 98 years from 1928 through 2025, including drops of about 44% in 1931 and 37% in 2008, according to Damodaran’s data. So we tested the comparison against actual history in two ways.

Every 18-year period since 1928

We ran our two families through every 18-year stretch of S&P 500 total returns, from 1928–1945 through 2008–2025, 81 periods in all. Each family invested $1,200 at the start of each year: the first for all 18 years, the second for only the final eight.

• The birth starter came out ahead in all 81 periods. The smallest advantage, about 2.7 to 1, came in the period that began in 1928, the year before the Great Crash.
• The typical (median) advantage was about 4.1 to 1, wider than the 3.3 to 1 in our steady 7% example.
• The birth starter never finished with less than they contributed. The late starter did twice, in the periods ending in 1974 and 2008, when a bear market hit in the last few years before the money was needed.
• Time smoothed the ride. Across the 81 periods, the S&P 500’s average annual return ranged from about 2% to about 18%, and it was never negative.

GoodNest analysis of annual S&P 500 total returns with dividends reinvested, from Damodaran’s data. Assumes $1,200 invested at the start of each year and no fees or taxes. Figures are before inflation, which affects both families equally. Past performance doesn’t guarantee future results.

The Treasury Department’s numbers

The Treasury Department and the IRS reached the same conclusion with a different data set. In the proposed Trump Account regulations, they calculated what a single $1,000 invested in a broad index of U.S. stocks would have been worth at age 18, depending on the child’s age when it was invested, for children born from 1926 through 2006.

Source: Department of the Treasury and IRS, proposed Trump Account regulations (Federal Register, March 9, 2026), using returns on a broad U.S. stock index from the Kenneth R. French Data Library for children born 1926 through 2006. Weak, typical, and strong are the 10th, 50th (median), and 90th percentiles of historical outcomes. Figures are before inflation.

Look at the first column. Even an unlucky $1,000 invested at birth, one in the worst 10% of historical outcomes, ended up ahead of the typical $1,000 invested at age 10: $2,980 compared with $2,460. At the other end, an unlucky $1,000 invested at age 17 was worth about $900 a year later. Money invested late has less time to recover from a bad stretch, which is the other half of the cost of waiting. It’s also why age-based 529 portfolios and target-date glide paths shift toward bonds and cash as college nears. That shift lowers expected returns in the final years and puts even more of the heavy lifting on the early ones.

What it takes to catch up

A late start doesn’t lock you out of a goal. You just have to put in more, and the required amount climbs quickly. The table shows the monthly deposit needed to reach the birth starter’s $42,100 by age 18 at the same hypothetical 7% return.

Hypothetical: 7% average annual return compounded monthly, deposits at the end of each month, no fees or taxes. Monthly amounts are rounded to the nearest dollar and totals to the nearest $100.

Starting at 10 means saving about $331 a month, 3.3 times as much, and contributing about $10,200 more of your own money to end up in the same place. Wait until 14, and the monthly amount climbs to about $766. In real market history, the typical late starter would have needed even more, about 4.1 times the birth starter’s monthly amount, because the median gap was wider.

The table carries a hopeful message, too. Starting at 10 beats starting at 14 by a wide margin, and starting at 14 beats never starting. With the same $100 a month, a start at 10 builds about $12,700 by age 18, more than double the roughly $5,500 from a start at 14. The best time to start was at birth. The second-best time is today.

Why the cost of waiting is so easy to underestimate

If waiting is this expensive, why do so many parents do it? Part of the answer is that human intuition handles compound growth badly. Researchers call it exponential growth bias: we tend to picture growth as a straight line, when compounding bends the line upward over time. In a widely cited study in the Journal of Finance, economists Victor Stango and Jonathan Zinman found that households with more of this bias tended to borrow more and save less.

The bias is even stronger for regular deposits like a monthly contribution. In experiments by researchers at Ireland’s Economic and Social Research Institute, members of the public estimated what steady yearly savings earning 5% would grow to. Their median guess was about 60% of the right answer over 20 years and about a third of it over 40 years. People underestimated both the compounding and how quickly steady deposits pile up. In a follow-up experiment, a calculator that spelled out the cost of delay in euros more than halved the bias, although the benefit was limited to participants with a college degree.

That’s the case for putting dollar figures on delay, as this article does. The other common reasons to wait, like holding out for a market dip or for a roomier budget, tend to look smaller once the cost is written down. Our guide to the psychology of generational wealth explains why waiting for the perfect moment to invest rarely pays off.

How to stop waiting this week

There’s one more reason to start early, and it isn’t measured in dollars. In Oklahoma’s SEED OK experiment, which began in 2007, newborns in randomly selected families received a state 529 account with $1,000 already in it. Four years later, parents in that group reported stronger social-emotional development in their children. Thirteen years in, those parents had higher educational expectations and had done more to prepare for college, according to a summary of the research in the Treasury Department’s proposed regulations. Long-term results, such as college completion, aren’t available yet, but the early findings suggest that an account can shape how a family thinks about a child’s future.

Here’s how to turn good intentions into a start date:

• Open an account now, even if it isn’t perfect. A 529 plan works well for college savings, while a custodial or brokerage account offers more flexibility. Choosing an account is a one-time decision, and every month spent deciding is a month of growth you don’t get back.
• Claim the free $1,000 if your child qualifies. Children who are U.S. citizens with a Social Security number and were born from January 1, 2025, through December 31, 2028, can receive a one-time $1,000 federal deposit into a Trump Account when a parent makes the election on IRS Form 4547, according to the IRS. Under Treasury’s proposed rules, the election stays open until the end of the year your child turns 17, and the money must be invested in low-cost funds that track a broad index of mostly U.S. stocks. The sooner it lands, the longer it grows.
• Automate a small amount. If $100 a month isn’t realistic yet, start with $25 or $50 and schedule it for payday. At 7%, $50 a month from birth grows to about $21,000 by age 18.
• Invest lump sums when they arrive. Birthday money, tax refunds, and bonuses do the most good when they’re invested right away. At 7%, $1,000 invested at birth grows to about $3,380 by age 18, while the same $1,000 invested at age 10 grows to about $1,720.
• Raise the amount as your budget grows. When daycare ends or a raise comes through, increase the automatic transfer. Just keep your own emergency fund and retirement savings on track first, as we explain in The “Oxygen Mask” Rule of Parental Finance.

Where GoodNest fits

The years when time is most valuable are often the years when budgets are tightest. Between diapers, daycare, and sometimes a single income, the first few birthdays can come and go before a family feels ready to invest. That’s where the people who love your child can help. At a hypothetical 7% return, a $50 gift from a grandparent at a first birthday could grow to about $158 by age 18, while the same gift at 15 would grow to about $61.

GoodNest lets family and friends mark birthdays and milestones with a contribution toward your child’s future, often alongside a small keepsake like a book, instead of another toy. GoodNest doesn’t hold or invest the money. Family send gifts straight to you by Zelle, Venmo, or PayPal, and you move them into the 529 plan, custodial account, or Trump Account you choose. The earlier those gifts start, the harder they work.

The bottom line

Waiting to invest for your child never arrives as a bill, which is exactly what makes it so costly. Starting at birth instead of age 10 more than triples what $100 a month becomes by age 18 at a steady 7%, and in real market history the gap has usually been wider. Inflation shrinks both balances but doesn’t close the gap between them, and cash has historically barely kept pace with rising prices. If you haven’t started, don’t let the numbers discourage you. Open an account, claim any free money, automate what you can, and let family gifts help. For the full roadmap, from choosing accounts to eventually handing the money over, head back to The Ultimate Guide to Building a Generational Nest Egg for Your Child.

Frequently asked questions

How much more will I have if I start investing for my child at birth instead of age 10?

At a hypothetical 7% average annual return, $100 a month invested from birth grows to about $42,100 by age 18, while the same $100 a month started at age 10 grows to about $12,700. That’s more than three times as much, even though the early starter contributes only 2.25 times as much money. In GoodNest’s review of every 18-year period of S&P 500 returns from 1928 through 2025, starting at birth ended with a median of about 4.1 times as much as starting at age 10.

Is it too late to start investing for my child at age 10?

No. Starting at 10 still gives your money eight years to grow, and every year you start sooner helps. At a hypothetical 7% return, $100 a month from age 10 builds about $12,700 by age 18, more than double what you’d have by starting at 14. To match what a family that started at birth would have, you’d need about $331 a month from age 10. Lump sums, family gifts, and free money such as the $1,000 Trump Account deposit for eligible children can help close the gap.

How does inflation affect the cost of waiting?

Inflation shrinks every future balance, but it doesn’t close the gap between early and late starters. Assuming 3% annual inflation, close to the long-run U.S. average, the birth starter’s $42,100 at age 18 would buy about what $24,700 buys today, and the age-10 starter’s $12,700 about what $7,500 buys today. Money kept in a savings account paying the 0.38% national average would lose purchasing power over 18 years.

What rate of return should I assume for my child’s investments?

No return is guaranteed, so it’s wise to plan conservatively. The S&P 500 returned about 10% a year before inflation from 1928 through 2025, with large swings along the way. GoodNest uses 7% for illustrations to allow for fees, a shift toward bonds as college nears, and the chance of lower future returns. The case for starting early holds across assumptions: at 5%, starting at birth still ends with about 2.9 times as much as starting at age 10, and at 9%, about 3.7 times as much.

How much do I need to invest each month to catch up if I start late?

At a hypothetical 7% return, matching the roughly $42,100 that $100 a month from birth builds by age 18 takes about $122 a month from age 2, $190 from age 6, $331 from age 10, and $766 from age 14. Because a late starter has less time for compounding, they also contribute more in total, about $10,200 more when starting at age 10.

Sources

• Aswath Damodaran, “Historical Returns on Stocks, Bonds and Bills”, NYU Stern School of Business (annual data through 2025, updated January 2026).
• U.S. Securities and Exchange Commission, Investor.gov, “Rule of 72” (glossary).
• U.S. Securities and Exchange Commission, Investor.gov, Compound Interest Calculator.
• Department of the Treasury and Internal Revenue Service, “Trump Accounts Contribution Pilot Program”, proposed regulations, Federal Register, 91 FR 11203 (March 9, 2026).
• Federal Reserve Bank of Minneapolis, “Consumer Price Index, 1913–”.
• Board of Governors of the Federal Reserve System, “Why Does the Federal Reserve Aim for Inflation of 2 Percent Over the Longer Run?” (FAQ, updated August 22, 2025).
• U.S. Bureau of Labor Statistics, “Consumer Price Index – August 2026” (released September 11, 2026).
• College Board, “Trends in College Pricing: Highlights” (2025).
• College Board, Trends in College Pricing and Student Aid 2025.
• Glen Luke Flanagan, “Best Savings Account Rates on September 3, 2026”, Fortune (September 3, 2026), citing FDIC national rate data.
• Victor Stango and Jonathan Zinman, “Exponential Growth Bias and Household Finance”, The Journal of Finance 64, no. 6 (2009): 2807–2849.
• Féidhlim P. McGowan, Pete Lunn, and Deirdre A. Robertson, “Underestimation of Money Growth and Pensions: Experimental Investigations”, Economic and Social Research Institute Working Paper No. 611 (February 2019).
• Internal Revenue Service, “4 Million Children Have Been Signed Up for Trump Accounts With 1 Million Claiming the $1,000 Pilot Program Contribution”, IR-2026-42 (March 31, 2026).

This article is for general educational purposes only and is not investment, tax, or legal advice. Examples are hypothetical, assume a steady 7% annual return unless noted, and don’t reflect fees, taxes, or any specific investment. Historical analyses use past market returns, which don’t guarantee future results. Inflation, savings rates, college costs, and Trump Account regulations can change. Investing involves risk, including possible loss of principal. GoodNest does not provide investment advice and does not hold or invest funds. Consider consulting a qualified professional about your family’s situation.