I used to smoke a lot in Korea. I started smoking when I was 17 just for curiosity. I was stupid enough to think that smoking made me look cool. I was addicted and spent a fortune on buying cigarettes. Eventually I quit in 2006 realizing that a pack of smoke is about $8-13 in Canada which was outrageous as I could buy a pack of cigarettes in Korea for $2-3. I could not afford the luxury that gives no single benefit to me.
I was talking to an IT staff yesterday and he said he had to pay $4000 for her wife’s tuition. I said investing in education is one of the greatest investment you will ever make since they last for at least 20 to 50 years. He wasn’t still happy and started complaining he is not getting paid enough for what he does etc… which got me open an excel spreadsheet from his computer. I started to calculate how much money he would expect to have if he stops smoking today and invests that money for next 30-50 years. I was also interested to know as well. I used simple avg return of S&P 500’s 11% between 1990 and 2013 and this was the result. (I ignored tax and other minor costs to get my point across and also there are many tax advantageous tools for you to use such as RRSP, TFSA etc…)
Click the following file to see how long it would take you to become a millionaire. Net worth calculator
He could have about $850,000 before he becomes 60 years old and he will almost double his investment within 5 years ($1.5M) if he invests $10 a day into a well-diversified ETF. When I showed this to him he was speechless for 3 minutes and I had to slap his face to wake him up. The wonder of compounding does these things to people. Albert Einstein said “Compound Interest is the Eighth Wonder of the World” Now you can believe it. Anyway the IT guy said he will quit smoking from tomorrow which lasted a couple of days but he started smoking again saying the programming made him smoke again. Haha… One good thing is he opened a mutual fund account and had the bank to set up automatic transfer of $10 every day from his saving account to his mutual fund.
I don’t particularly like mutual fund due to its high MER but it is better than nothing. I felt good about myself as I saved a poor soul and he will thank me later for the tip.
Can you afford to save $10 a day? Then run to the bank right now.
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