By one of life’s little coincidences, about an hour after posting the above about smoking I came across this passage in a book I was reading. The book is by Noel Whittaker, an Australian who writes books about money management. Here’s what he says:
"Jack and Jill are 20. Jack chooses to spend about $200 a month on smoking. Jill invests $200 a month in an equity based investment.. As the price of cigarettes tend to rise with inflation, Jill keeps increasing her monthly investment in line with inflation, so her spending matches Jack’s.
Where will they be at age 65 if inflation averages 4% and the return on Jill’s investment averages 9%?
They both will have ‘invested’ $331,000 over those 45 years. Jack’s return is almost certain to be health problems. Jill’s return will be a staggering $2.4 million."So is that right?
Aus$200 a month on cigarettes is a fairly conservative amount at today’s cigarette prices. And long term smokers will have their health impaired. They may not get cancer, but at the very least they will incur damage to their lungs, heart and arteries that will have a negative effect on their health. And his figures for the one who saves are correct.
So which would you rather end up with kids? A couple of million bucks (a million English pounds or so) or a wrecked rancid body??
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