As I write this, the average price of a pack of cigarettes in the United States is over $5. The price varies from one place to another, mostly due to differing state and local taxes. It is much higher in some areas. Buying a pack a day at the average price, comes to about $165 per month, or about $2000 per year.
What if — instead of sticking your money in your mouth and setting it on fire and sucking on it — you took that $165 per month and invested it in a good mutual fund?
If you got compounded (all earnings are reinvested) earnings of 5% annually on your investment:
after 10 years you would have over $24,000.
after 20 years, $65,000,
after 30 years, $131,000,
after 40 years, $239,000,
after 50 years, $414,000.
If your mutual fund did little better and grew at 7%,
after 10 years, $27,000,
after 20 years, $81,000,
after 30 years, $187,000,
after 40 years, $395,000,
after 50 years, $804,000.
If your mutual fund grew at 9%,
after 10 years, $30,000,
after 20 years, $101,000,
after 30 years, $269,000,
after 40 years, $669,000,
after 50 years, $1,613,000.
If you would like to do some calculations yourself, go to https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator
If you think looking into the future 50 years is unreasonable, have you ever known or heard of anyone who started smoking when they were in their 20s and never stopped?
Cigarette prices have changed over the years and will continue to change in years to come, so investments-in-lieu-of-smoking might grow exactly as shown over. But the principle holds true and alwayse will. Cigarettes aren’t only bad for your health, they’re bad for your wealth. As the saying goes,”put that in your pipe and smoke it” (metaphorically speaking, of course).
