Insights

Picture of Steve Brown In 2004, I read an article about skipping a cup of coffee and investing the money instead, because even a small amount invested over time can yield a positive impact.  I, like most of us, would frequently enjoy a soft drink or cup of coffee as a pick me up in the middle of the afternoon. I took this new information to heart and thought I would give it a try.

In the spring of 2004, I gave up my afternoon beverage and changed to tap water. Some days, I was drinking a $0.99 Big Gulp®, and other days I would drink a $3.00 cup of designer coffee. On average, I figured I was spending at least $10-15 per week.

I opened an account with an investment advisor and set up a monthly auto-debit to fund $50 into this account. I had my advisor help me pick out a growth fund and started investing. For 15 years, I have faithfully allowed the monthly auto-debit to continue. I have given $50 per month for 15 years.

$50 per month x 12 months = $600 per year
$600 per year x 15 years = $9,000

So, how much joy do you get out of that cup of coffee? As of today, my account has a balance of $23,059.70. Now, I do make enough money that I could have easily done both. The absence of the $50 monthly withdrawal did not exactly empty my account so that I could not afford the afternoon drink. However, I did manage to break the daily purchase habit, and when I need a drink in the afternoon, I still grab a glass of tap water (probably a healthier choice anyway).

Now, the fun is not over. When looking at the investment performance on this account, it has averaged around a 10% return. Let’s look at what will happen over the next 15 years if I continue to do the same.

Year  Return   Total (Return + $600)
 2020  $2,433  $26,760
 2021  $2,736  $30,095
 2022  $3,070  $33,765
 2023  $3,436 $37,801 
 2024  $3,840 $42,242 
 2025  $4,284  $47,126
 2026  $4,733  $52,498
 2027  $5,310  $58,408
 2028  $5,901 $64,909 
 2029  $6,551  $72,060
 2030  $7,266  $79,926
 2031  $8,053  $88,579
 2032  $8,918  $98,096
 2034  $9,870  $108,566
 2035  $10,917  $120,083

So, if the fund that has yielded an average of a 10% return over the last 15 years continues to do the same over the next 15 years, and I continue to contribute $600 per year to the fund, I can expect to have $120,000!! Seriously!! Skipping a cup of coffee starting when I was 36 years old could put $120,000 in my pocket at retirement.

A Chinese proverb says, “The best time to plant a tree is 20 years ago. The second-best time is today.” Investing is the same. My first $9,000 invested is already worth $23,060, but in 15 years, the next $9,000 is expected to be $121k!!! That’s outrageous!!

Just think what it could have been worth if I had also given up beer, bourbon and golf!!! The point of this example is not to make you feel guilty next time you order your designer drink, but to point out that you do not need to invest thousands of dollars per month. A very modest investment, when done early and faithfully, can have a very significant impact. I encourage you to call your investment advisor, open an account and start investing a small amount TODAY!!

Need help with starting to save and invest?

At Old National, our associates will take the time to listen and help you determine the best savings and investing options for you. Call us at 1-800-731-2265 or submit a request for an Old National banker to contact you.


Steve Brown has been a commercial banker at Old National for the past seven years and has worked in banking since 1988. He graduated from University of Evansville with a degree in finance and economics and received his MBA from Indiana University in 1996.  

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