Monday, October 27, 1997
For the Price of
a Soda
Robert Sheard
([email protected])
(Editor's Note: Some things are important enough to repeat. This Fribble originally ran in December of 1996.)
You know that soda you snag from the vending machine at work every day (sometimes twice a day)? Would you trade me $100,000 for it?
If you would stick the 60 cents in a jar each day and invest it once a year, it's amazing how fast it can grow. Let's look at the numbers for an investor who uses DRiPs, starts with $100 and then socks away his Coke money every day and invests it just once a year.
A 60-cent-a-day habit runs you $219 a year. Not huge money, but a habit's a habit. Don't touch my caffeine, but there are even more expensive habits out there waiting to become cash cows. If you start with $100, add $219 a year, and achieve 20% returns with a DRiP version of the Dow Approach, your Coke money becomes nearly $113,000 after 25 years.
Of course, $113,000 in 25 years won't still buy you a pair of his and hers Mercedes like it can today, but it should still be able to buy you one (about $42,000 adjusted for inflation). So, you still want that Coke?
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