EAT turkey BUY stuff – RiskSavage – Medium
The holidays are here! Time to fatten up the belly and thin out the wallet. This is the projected scenario according to New York Times.
I always get anxiety about the holidays because I know it’s gonna be an expensive couple months. My wife and I agree to only buying gifts for kids in High School and below. As both our families continue to grow, we had to set a limit somewhere.
“Retailers are preparing for one of their biggest weekends of the year as an estimated 164 million people are already planning to go shopping Thanksgiving Day through Cyber Monday, according to the annual survey released today by the National Retail Federation and Prosper Insights & Analytics.” –NRF.
NRF also reported, “2017 sales out-did 2016 sales by 5.5%. $691.9 Billion in sales was recorded for 2017.” Can we really break another record and get over 5.5%? I don’t know. I do know that people love to spend on the holidays and this should reflect in the stock market.
Our culture is set on buying and exchanging gifts with everyone you now. Last year CNBC reported, the average consumer thought they’d spend near $1000 during the holidays. I can’t find what the actual average came out to be.
Imagine, rather than spending the $1,000 on the holidays, you invested it. The rule of 72 says, “take 72 and divide by the average annual interest rate to get how long your investment will take to double.”
Assume the $1000 investment is earning 10% a year, compounded annually. The Rule of 72 suggests it’ll take around seven years to double in value (72 / 10 percent). Your balance would also be worth nearly $2,600 ten years later (according to this interest calculator).
Nothing to get too excited about but, a profit of $1600 is better than nothing. To earn more, either invest a bigger sum or earn at a better rate.
For the real fun, we’ll say you invest the $1,000 into a high risk investment each year, ie (Crypto). Rather than 8%, you happen to generate 20% a year (not impossible).
The additional interest would bring you to $37,342 at year ten. That’s over $27K profit in ten years. You could buy a brand new car with that. “Be a cheap ass on the holidays and buy yourself a new car in ten years.”
Now for less fun and more reality. I haven’t looked at my current Crypto balance because I’m too scared, but I think it’s around $25K. With zero additional contributions for the next ten years, my investments need to grow at 15% a year just to get back to break even of $100K.
!5% is a pretty remarkable interest rate, so Crypto has some major turning around to do to reach numbers like that. In the past, I’ve seen as high as 5,000% in a few months. My best was 300% in a day.
Just for hype and pumping myself up, pretend my current $25K Crypto holdings grow to $1,000,000. It would need to earn 400% a year to reach a million in ten years.
I had to use a different calculator to use 400%. The first calculator was limited to 20%. Perhaps 400% is just to ridiculous for them to compute.
It would take twenty years at 20% for my $25K to reach $1,000,000. Not impossible and certainly more feasible than 400% in ten years. Crazier things have happened. Just gotta be patient.
Start investing early. Compounded interest is considered the 8th wonder of the world (a miracle). If you have the opportunity to invest early and frequently, the gains you could potentially make are massive compared to infrequent investing or worse yet, not investing at all.
Remember, every $100 gift you buy this season is $100 that could have been worth $1,000 or more in the future. lol. Good luck with your shopping! May we all make through without maxing credit cards. 🙂 *Dreaming of 20 years at 20% annually