In Eschewing Cigarette Investment for ETFs, Here's the Amount You'd Amass in Thirty Years:
Turning Cigarette Money into Investments: A Wealth-Building Alternative
A new analysis from comparison portal Verivox reveals an intriguing financial proposition for smokers: investing their daily cigarette expenditure into an Exchange-Traded Fund (ETF) savings plan could potentially amass a significant wealth over several years.
According to the calculations, an individual who smokes a pack of cigarettes daily could accumulate approximately 54,000 euros in their account after 10 years, and around 500,000 euros after 30 years. This financial growth contrasts significantly with the cumulative expenditure on cigarettes during the same period – 10 years would cost about 37,600 euros, and 30 years would set them back approximately 169,000 euros, as per the German Cigarette Association's latest figures (which peg the cost of a pack at 8.70 euros).
Instead of spending money on tobacco, the savings from quitting smoking can be channeled into ETF savings plans, whose returns could yield substantial wealth over time. Verivox's calculations are based on an annual return rate of 7.5%. Under this model, an ex-smoker could potentially have 54,000 euros in their account after 10 years, and over 500,000 euros after 30 years. Taxes on these gains would leave the investor with a substantial net amount of approximately 441,000 euros (as per Verivox).
While it's crucial to acknowledge the risks inherent in stock markets (total loss of the invested capital cannot be ruled out), well-regulated, consistent investments can translate into wealth accumulation over the long term. Moreover, such a move would also have positive health benefits, as quitting smoking is undoubtedly advantageous when it comes to one's overall well-being.
It's worth noting that the length of your savings plan, coupled with the returns and compound interest effect, plays a significant role in growing your wealth. Monthly contributions of around 265 euros (based on a pack-a-day smoking habit), when invested in the MSCI World stock market index with an average annual return of 7-11%, could potentially yield impressive results over time.
This comparison underscores the financial benefit of quitting smoking and re-allocating the saved funds towards long-term investments. Such consistent, strategic financial planning can lead to substantial growth – a stark contrast to the escalating costs associated with maintaining a smoking habit.
What if instead of investing cigarette money into cigarettes, one chose to invest it in personal-finance avenues like the stock-market or finance through Exchange-Traded Fund (ETF) savings plans? For instance, on quitting a daily smoking habit, one could potentially accumulate approximately 54,000 euros in their account after 10 years, and around 500,000 euros after 30 years, assuming an annual return rate of 7.5%.
