What a $5 Coffee Will Cost You

Hi there my friend, I hope your week is off to a great start!

Stocks are at an interesting spot as it seems not much is going on. If you are feeling bored that’s okay as 2020 spoiled us into seeing stocks shift 3% - 5% almost daily.

Moving on, crypto decided to dive head first off a cliff last week.

Bitcoin dropped over 50% at one point and had every laser eye profile picture on twitter rethinking their image.

Also for those golf fans out there, Phil Mickelson won the PGA Championship at 50 years old showing us you should never doubt an old timer.

Enough with praising Papa Phil, let’s investigate your coffee habits.

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“A wise person should have money in their head, but not in their heart.” - Jonathan Swift

If you are on the fintwit side of Twitter you know there is no shortage of coffee jokes.

I was guilty last week of buying my own coffee, but in my defense it was only $2.

Seeing all the coffee talk on Twitter I actually became curious about how much this habit could cost you long term.

Let’s kick it off with a little basic math.

Coffee Crunching

Everyone meet Billy Bob.

Here are his coffee habits:

• Coffee price: $5

• Coffee’s bought per week: 5

• Bitcoin’s owned…never mind.

With the assumptions above Billy Bob will be spending approximately $100/month on coffee.

That adds up to $1,200/year. Not terrible.

But wait…what if that $100 was invested each month?

Investing that $100 each month for 30 years at an 8% return would give Billy $150,000.

In that time his contributions would total $36,000 meaning he earned $114,000.

So technically those daily coffee’s could be costing Billy Bob over 100k long term.

For fun, let’s run the numbers with a couple different cases.

Martha

Martha buys the same $5 coffee except she gets one 7 days a week.

That totals $140/month and $1,680/year.

Invested at the same 8% rate for 30 years would be worth $210,181.

Dr. Powell

Dr. Powell has an expensive taste.

He buys his coffee seven days per week at $8 per order.

That total’s $224/month and $2,688/year.

Invested the same as the other cases his coffee account would be worth $336,290 after 30 years.

But we all know Dr. Powell can just print more money so he isn’t worried about it.

Conclusion

As seen by Billy Bob even a small coffee habit can be expensive over the long term.

While the coffee jokes are funny, there is some truth behind them.

If you can make the majority of your coffee at home you might find yourself with an extra 100k down the road.

Despite this, don’t forget to treat yourself every now and then.

Those Starbucks cold brew’s do hit different.

Something is in the works! Be on the lookout the next few weeks as Always Invested subscribers will be getting a sweet deal.

Sorry crypto, some of these are just too good.

Thanks for reading, if you have any questions, comments, suggestions, etc. about the email send me a DM on twitter. See you next week!