$17,344! Or Would You Prefer A Nice Coffee Instead?

We’ve all heard the Victorian proverb ‘look after the pennies and the pounds will take care of themselves.’ This is of course, sound advice. But it was also written during a time when mass consumerism was in it’s infancy.

Now that we are in Trumpian times, with consumer spending completely off the charts. I think we all need a new proverb to get us back on the winning side of wealth again. It goes something like this …

‘Stop drinking Starbucks and the Stock Market will buy you a house.’

This is the true power of compound interest. It’s why the wealthy invest in the Stock Market and why we should all do it too. Trust me when I say there is nothing to fear. This is not about being the Wolf of Wall Street, but more like the Bunny of Baltimore. Some very simple maths and safe investments are more than enough to make you rich!

My ten year total of $17,344 is based on the price of a coffee costing $4 per day over a five day week. It is also based on the fact you are willing to take a flask into work and have instant coffee instead, or God forbid, some water!

Using a compound interest calculator, of which there are many online. I found that just $20 per week, saved over ten years at an interest rate of 10% will hit this specific target.

I am no Stock Market expert by any means. But what I do know is that investing in the S&P 500 through an ETF (Exchange traded fund) will produce an average of at least 10% over a typically long period of time. It is always best to do your own research on these things of course, so here is a an article I found online …

S&P 500 Average Returns and Historical Performance

But while this $17, 344 comes from skipping a coffee each day, how much more do you think you could have in ten, or even twenty years time, by just quitting just some of your daily consumption habits?

This is where it gets rather scary!

Lets start with the coffee again. But rather than just ten years of saving, lets extend it to twenty. With the same amount of daily savings in a similar Stock Market investment, the total is truly remarkable. Prepare for a shock …

$62,430

And in 30 years time …

$179,263

No, I’m not joking. It really is this high and it’s all down to compound interest. Not investing our money in the right places is the biggest financial mistake we can make in life. I’m really hoping that when some people read this, It could make a big difference to their future, and possibly their children's too!

Want to be a millionaire? Well a saving of just $120 a week for 30 years will get you there. Just think about all the unnecessary consumer products you don’t really need and make a start today. Not only will you be making yourself a fortune, but saving the environment too!

Here is a simple compound interest calculator that I found online. If you have never used one before, believe me when I say it can be life changing. I just wished I had understood it sooner!

https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

As for the Stock Market. Well it really couldn't be easier to start investing these days. I personally use a company called Trading 212. They are registered with many global financial safety nets and offer low cost investing. But there are many others you can use too. It’s all just a matter of researching what you think is best for your own personal circumstances, then go for it!

So please just don’t wait as long as I did. Start giving up those consumer habits now and make yourself a future millionaire.

Thanks for reading

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Disclaimer: these are my personal opinions and should not be regarded as professional financial advice. I encourage you to seek guidance from a licensed financial advisor for your specific situation

Originally published at https://medium.com/never-stop-writing/fancy-a-starbucks-or-17-344-in-ten-years-time-e764de64fbed?postPublishedType=repub