Paragraph
It doesn’t matter how you look at it, specialty coffee is a waste of money. Which is why I wonder, why does arguably one of the brokest first world demographics, the student, waste so much money on it? Kevin O’Leary has said it before, and I’m going to break it down by the numbers. Suppose 5 days a week, you buy Starbucks, averaging $5 a day, or $25 a week. You do this throughout the school year, which is about 34 weeks a year. This ends up being about $850. $850 might not sound like a whole lot initially, but once you calculate this for 4-5 years of schooling, and then add the interest you could have made if you decided to put it into a retirement fund.
Suppose you invested this $3400 into a S&P 500 index fund which averages a return year-over-year of about 10.5%. If you let your $3400 in Starbucks money ride in that fund for a few decade, the rewards could be quite worthwhile.
Year 1: You would have $3757, which is an annual earning of $357
Year 2: You would have $4151, which is an annual earning of $394
Year 3: You would have $4587, which is an annual earning of $435
Year 4: You would have $5069, which is an annual earning of $481
Year 5: You would have $5601, which is an annual earning of $532
Year 6: You would have $6189, which is an annual earning of $588
Year 7: You would have $6839, which is an annual earning of $649
Year 8: You would have $7557, which is an annual earning of $718
Year 9: You would have $8351, which is an annual earning of $793
Year 10: You would have $9227, which is an annual earning of $876
Year 11: You would have $10196, which is an annual earning of $968
Year 12: You would have $11267, which is an annual earning of $1070
Year 13: You would have $12450, which is an annual earning of $1183
Year 14: You would have $13757, which is an annual earning of $1307
Year 15: You would have $15202, which is an annual earning of $1444
Year 16: You would have $16798, which is an annual earning of $1596
Year 17: You would have $18562, which is an annual earning of $1763
Year 18: You would have $20511, which is an annual earning of $1949
Year 19: You would have $22665, which is an annual earning of $2153
Year 20: You would have $25045, which is an annual earning of $2379
Year 21: You would have $27674, which is an annual earning of $2629
Year 22: You would have $30580, which is an annual earning of $2905
Year 23: You would have $33791, which is an annual earning of $3210
Year 24: You would have $37339, which is an annual earning of $3548
Year 25: You would have $41260, which is an annual earning of $3920
Year 26: You would have $45592, which is an annual earning of $4332
Year 27: You would have $50380, which is an annual earning of $4787
Year 28: You would have $55670, which is an annual earning of $5289
Year 29: You would have $61515, which is an annual earning of $5845
Year 30: You would have $67974, which is an annual earning of $6459
Year 31: You would have $75112, which is an annual earning of $7137
Year 32: You would have $82998, which is an annual earning of $7886
Year 33: You would have $91713, which is an annual earning of $8714
Year 34: You would have $101343, which is an annual earning of $9629
Year 35: You would have $111984, which is an annual earning of $10641
Year 36: You would have $123743, which is an annual earning of $11758
Year 37: You would have $136736, which is an annual earning of $12993
Year 38: You would have $151093, which is an annual earning of $14357
Year 39: You would have $166958, which is an annual earning of $15864
Year 40: You would have $184488, which is an annual earning of $17530
Year 41: You would have $203860, which is an annual earning of $19371
Year 42: You would have $225265, which is an annual earning of $21405
Year 43: You would have $248918, which is an annual earning of $23652
Year 44: You would have $275054, which is an annual earning of $26136
Year 45: You would have $303935, which is an annual earning of $28880
Year 46: You would have $335848, which is an annual earning of $31913
Year 47: You would have $371112, which is an annual earning of $35264
Year 48: You would have $410079, which is an annual earning of $38966
Year 49: You would have $453138, which is an annual earning of $43058
Year 50: You would have $500717, which is an annual earning of $47579
Year 51: You would have $553292, which is an annual earning of $52575
Year 52: You would have $611388, which is an annual earning of $58095
Year 53: You would have $675584, which is an annual earning of $64195
Year 54: You would have $746520, which is an annual earning of $70936
Year 55: You would have $824905, which is an annual earning of $78384
Year 56: You would have $911520, which is an annual earning of $86615
Year 57: You would have $1007230, which is an annual earning of $95709
Year 58: You would have $1112989, which is an annual earning of $105759
Year 59: You would have $1229853, which is an annual earning of $116863
Year 60: You would have $1358987, which is an annual earning of $129134
Year 61: You would have $1501681, which is an annual earning of $142693
Year 62: You would have $1659358, which is an annual earning of $157676
Year 63: You would have $1833590, which is an annual earning of $174232
Year 64: You would have $2026117, which is an annual earning of $192527
Year 65: You would have $2238860, which is an annual earning of $212742
Year 66: You would have $2473940, which is an annual earning of $235080
Year 67: You would have $2733704, which is an annual earning of $259763
Year 68: You would have $3020743, which is an annual earning of $287038
Year 69: You would have $3337921, which is an annual earning of $317178
Year 70: You would have $3688403, which is an annual earning of $350481
After 40 years, you’d be looking at a value of $184,000 minus inflation of about $7500. Scale that up to 60 years, that’d be $1,347,832 after inflation. Investing early in an index fund and letting it ride for life is worthwhile if you have the patience. 20 years from now when you decide to get started with an investment in a fund, the rewards will be a fraction of that.
No Comments