Investment Concepts

Put Your Money Where Your Mouth Is... And Have Something to Show For It

Frivolous Spending Transformed Into Savings

by Leon LaBrecque

Mr. LaBrecque is Managing Partner & CEO of LJPR Financial Advisors in Troy, MI. Connect with him by e-mail: [email protected]

Septmeber 14 — We have a very cool finance lab in our office, complete with a Bloomberg terminal and access to all the inner workings of the finance world. So when three of our bright summer interns were working in the lab, we came up with a good question: What if instead of putting stuff in your mouth, you put it in your investment pool?

To make it fair, we assumed that you spent $20 a week on some oral fixation: smoking, junk food, beer, and coffee. Don’t get me wrong, I like beer (Ok, and a quick deep dish pizza once in a while). But ‘what if’ you bought $20 a week of stock instead of $20 a week of products? We assumed you reinvested the dividends and bought quarterly with a $10 commission fee per transaction.

Here are the results:

Beer: If you invested $20,800 in Molson Coors (TAP) over the last 20 years ($20 per week for 20 years) your balance on 01/01/16 would be $81,503.05. That says it all.

Pizza: If you invested $20,800 in Papa John’s (PZZA) over the last 20 years ($20 per week for 20 years) your balance on 01/01/16 would be $106,734.46. How about that for a deep dish?

Coffee: If you invested $20,800 in Starbucks (SBUX) over the last 20 years ($20 per week for 20 years) your balance on 01/01/16 would be $207,141.99. That’s a lot of grande lattes.

What if instead of putting stuff in your mouth, you put it in your investment pool?

Smoking: If you invested $20,800 in Vector (VGR) over the last 20 years ($20 per week for 20 years) your balance on 01/01/16 would be $207,267.13. Holy Smoke!

Bagels: If you invested $20,800 in Panera (PNRA) over the last 20 years ($20 per week for 20 years) your balance on 01/01/16 would be $307,035.26. That’s a tasty return!

All: If you invested $104,000 over the last 20 years ($20 per week for each stock for 20 years, or $100 a week) your balance on 01/01/2016 would be $909,681.89. That’s about a 18.561% annual return.You don’t have to buy individual stocks like our example, but you could change a habit and save more money, maybe in your 401(k) plan. It might make sense to put your money where your mouth is.

Thanks to Kenneth Solecki, Derek Strybel, and Blake Pokley.

 

 

 

Disclosure: Coca-Cola Co (KO), McDonald’s Corp (MCD) and Altria (MO) are equities currently held in some client portfolios. Upon written request, LJPR will provide recipients of our blog a list of all recommendations it has made during the previous twelve (12) calendar months. As with any investment, past performance is not indicative of future results. Therefore, it should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. Investing any in any security can result in the complete loss of principal.