{"id":261,"date":"2019-01-25T18:21:03","date_gmt":"2019-01-25T08:21:03","guid":{"rendered":"https:\/\/bantacsfinancialsolutions.com.au\/Nblog\/?p=261"},"modified":"2019-01-25T18:27:47","modified_gmt":"2019-01-25T08:27:47","slug":"the-financial-cost-of-smoking-over-your-working-life","status":"publish","type":"post","link":"https:\/\/bantacsfinancialsolutions.com.au\/Nblog\/the-financial-cost-of-smoking-over-your-working-life\/","title":{"rendered":"The Financial Cost of Smoking Over Your Working Life"},"content":{"rendered":"
\n\n\n

Cigarettes are back in the news with research released this month from the<\/p>\n\n\n\n

Australian Bureau of Statistics (ABS)revealing that 13.8% of Aussie adults consider themselves daily smokers.<\/p>\n\n\n\n

It\u2019s a sad statistic given the irrefutable evidence of the damage that smoking does both to your health and your finances. Today I\u2019ll give a couple of examples which may help to motivate smokers to give up, at least cut down.<\/p>\n\n\n\n

Think about two people aged 25.. Assume that one chooses to smoke, and the other chooses to invest the price of a large packet of cigarettes a day ($29 a day or $882 a month) into a managed fund that invests her money into a range of blue-chip shares. The price of cigarettes rises at least as fast as inflation, so it we assume inflation runs at 3 per cent per annum, the price of cigarettes will rise by 3 per cent per annum..<\/p>\n\n\n\n

If the non-smoker increases their investment by 3 per cent per annum too, the amount invested, or spent on cigarettes, by age 65 will be $818,000. If the share trust returns 9 per cent per annum, (a realistic return if inflation is 3%) the sum accumulated by the investor will be $4.6 million at age 65. The smoker\u2019s return on their investment is ongoing health problems, the non-smoker has become seriously wealthy.<\/p>\n\n\n\n

You may argue that $4.6 million won\u2019t be a huge sum in 40 years time after inflation is taken into account, but it is equivalent to about $1.4 million in today’s dollars.<\/p>\n\n\n\n

Put it another way. If a person who is young now wants to retire at age 65 with the equivalent of $1.4 million in today’s dollars all they have to do is invest the equivalent of a packet of cigarettes a day from the day they start work.<\/p>\n\n\n\n

What if you are older and have a mortgage?<\/p>\n\n\n\n

CASE STUDY You are age 35 and have a home loan of $400,000 over 30 years which you are repaying it at $2147 a month. If you quit smoking and use the $882 a month saved to increase your payments to $3029 a month you will pay off the loan in 16 years. You will be debt free at 51 instead of 65 and save over $200,000 in interest.<\/p>\n\n\n\n

If you give up smoking make sure you commit the money that you are going to save, otherwise, it\u2019ll be quickly frittered away like your last pay rise. If you have a home loan immediately increase the repayments by the amount you no longer spend on cigarettes, if you don\u2019t have a loan, talk to an adviser about a regular savings plan. Above all get serious \u2013 as my GP says \u201cthey all stop after the first heart attack\u201d.<\/p>\n\n\n<\/div>","protected":false},"excerpt":{"rendered":"

Cigarettes are back in the news with research released this month from the Australian Bureau of Statistics (ABS)revealing that 13.8% of Aussie adults consider themselves daily smokers. It\u2019s a sad statistic given the irrefutable evidence of the damage that smoking does both to your health and your finances. Today I\u2019ll give a couple of examples …<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":{"0":"post-261","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-investment","7":"anons"},"yoast_head":"\nThe Financial Cost of Smoking Over Your Working Life - Noel Whittaker's Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/bantacsfinancialsolutions.com.au\/Nblog\/the-financial-cost-of-smoking-over-your-working-life\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Financial Cost of Smoking Over Your Working Life - Noel Whittaker's Blog\" \/>\n<meta property=\"og:description\" content=\"Cigarettes are back in the news with research released this month from the Australian Bureau of Statistics (ABS)revealing that 13.8% of Aussie adults consider themselves daily smokers. 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