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what if you put away $3 a day for the last 5 years?

sv2007

sv2007

Well-known member
Joined
Jul 12, 2007
Location
Sunnyvale
Moto(s)
Majesty YP400
So, a couple of things from the other investment thread (or the many here in KS).
1.it reminded me that I wanted to buy some gold, and
2. I wasn't able to find a decent S&P 500 calculator.

So I wrote my own calculator last night.

If you had put aside $3 every day the last 5 years, you'd have $7154 right now.

This assumes investing in S&P 500 and accounts for SPY ETF management fees, discount broker fees, and dividend re-investment. I.e. Anybody can make this return.

Now, if you had done that for the past 10 years, you'd have $17910 after all fees.
How about 15 years? $30,630
20 years? $44,965

Not to bad for pocket change.

The key here is that you are playing the averaging effect (like greatly reduced risks) plus dividend reinvestment (like compounding $).
 
If I have $3 I'm getting an ice cream sandwich ($1.59), a scratcher, and pocketing the change like a baller.... :party
 
I used to have a couple of laminated sheets showing someone how their income, Social Security and IRA/401ks worked with various return rates.

I, periodically, am called to do retirement seminars for work and found them helpful for younger people to understand how to plan. I think many would be surprised how little one needs to save per week/month/year to have a healthy nest egg at retirement.
 
I added one more thing to the calculator, where if a person skips the $3 /month contribution during periods of high unemployment (I used 7.5%), then here's what he gets:

Instead of total contribution of $5551 during those 5 years, he'll only contribute $3094.

Now, here's the interesting part:
He'll have $3317 (instead of $7154) for the 5 yeras of investing.

And $6097/$8765 for 10 years (vs $11011/$17910)
etc.

So, if makes a big difference to continue contributing at all times so you can buy when the market is low (during high unemployment).

BTW, I've accounted for ETF expense ratio, brokerage fees, even money market rates for the return calculations. So that's the actual money you'll get (less tax of course).
 
Gave up the daily coffee purchase 3 years ago.. pretty much made that right there. :banana

Young folks... SAVE!!! It will pay off.
 
Been putting a couple hundred every month via direct deposit into swppx mutual funds. Don't even feel it, and my investment keeps going up and up. What a time to be alive
 
Meter Man said:
I used to have a couple of laminated sheets showing someone how their income, Social Security and IRA/401ks worked with various return rates.

I, periodically, am called to do retirement seminars for work and found them helpful for younger people to understand how to plan. I think many would be surprised how little one needs to save per week/month/year to have a healthy nest egg at retirement.
Click to expand...

Right, compound interest is pretty awesome.

The thing about stocks is that they don't have a constant return rate and price, so a calculator is needed to accurately get a return value.

Once I added the unemployment option, I'm amazed at the differece in returns. For example, during periods of high unemployments where many would stop contributing, it really kills the final return.

Now, I'm not saying to buy everything during periods of high unemployment (which may not be smart because you don't know the bottom, i.e. don't time the market), but the calculator results do show a dramatic difference when the contribution flows continuously vs haphazardly.
 
Yakoo752 said:
our whole economy is based on the opposite of this...
Click to expand...

Not unbridled spending.
Saving does not mean not spending.

You can save towards a goal: for example trackdays. If you saved $3/day for the last 5 years, you'll be able to spend $7k for trackdays this year. Now, that's a lot of riding.
 
And we are not talking about gold investments or other hard to obtain investments; this is just based on S&P 500. You walk down to any brokerage and open an account (there are so many everywhere now) and buy S&P500 ETF. (BTW, I'm conservative so my calculator used the most expensive ETF so you'll come out ahead for sure)

If you did that there is

No thinking, no maintenance, no headaches.

Here's what the calculator said:

Value = $7412
Value less fess = $7154
Total contribution = $5551

Sure there's inflation, but I don't think trackdays has gone up that much. Yes, the trackday index.
 
sv2007 said:
Not unbridled spending.
Saving does not mean not spending.

You can save towards a goal: for example trackdays. If you saved $3/day for the last 5 years, you'll be able to spend $7k for trackdays this year. Now, that's a lot of riding.
Click to expand...

but then what do you have leftover for retirement?

The average American carries $15k in credit card debt alone, not to mention cars, homes, college. We are an economy of spend, not save.

I feel bad for my peer group - not sure what they plan on doing at 65 when retirement comes knocking. Most have $0 savings, live paycheck to paycheck... but they do drive them fancy BMWs :laughing
 
Just having direct deposit and money at the end of the month to transfer to an IRA makes a big difference.

If everybody skipped a couple meals eating out a week, they could save 2-4 times as much.

Come Payday, Pay Yourself first by saving for retirement.


budman said:
Gave up the daily coffee purchase 3 years ago.. pretty much made that right there. :banana

Young folks... SAVE!!! It will pay off.
Click to expand...

Yakoo752 said:
our whole economy is based on the opposite of this...
Click to expand...

Budman, Why do you hate America? :laughing
 
NorCalAthlete said:
$300 / month towards IRA, $300 towards saving would be a good start for most people.
Click to expand...

bruceflinch said:
Just having direct deposit and money at the end of the month to transfer to an IRA makes a big difference.

If everybody skipped a couple meals eating out a week, they could save 2-4 times as much.

Come Payday, Pay Yourself first by saving for retirement.






Budman, Why do you hate America? :laughing
Click to expand...

Would you guys say putting the money into an IRA is better than mutual funds?
 
I have a couple IRAs, that I choose how it is invested. Mutual funds, bonds & blue chips stocks.
The IRA allows you to put some money away to save tax burden.
 
asdfghwy said:
Would you guys say putting the money into an IRA is better than mutual funds?
Click to expand...

Once in an IRA you choose how it's invested afterwards so they're not mutually exclusive.

Check out ETFs...they charge about 1/4 the fees of Mutual Funds.

I got very lucky, I invested all my money at the bottom of the market in 2008 and sold it in 2012 to buy a house. Had I held on it would be worth a lot more but the house has gone up in value more than my portfolio would have.

NOw I have a combination of ETFs, Canadian Bank stocks and Berkshire Hathaway B.
 
HappyHighwayman said:
Once in an IRA you choose how it's invested afterwards so they're not mutually exclusive.

Check out ETFs...they charge about 1/4 the fees of Mutual Funds.

I got very lucky, I invested all my money at the bottom of the market in 2008 and sold it in 2012 to buy a house. Had I held on it would be worth a lot more but the house has gone up in value more than my portfolio would have.

NOw I have a combination of ETFs, Canadian Bank stocks and Berkshire Hathaway B.
Click to expand...

HappyHighwayman said:
I drink only black coffee so I stick with the free stuff at work:thumbup
Click to expand...

Interesting.. guess I need to do some research about IRAs then.

And yeah, the black coffee at work is complete shit but it's free; beggers can't be chosers
 
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