All The Small Things

I've been looking at ways to have more money available for investing and one thing that stood out for me is the friction of day-to-day living. This is the cab to work or daily pick-me-up coffee that we buy. Over the course of a year, boy do these things add up!

Lunch

We all need to eat, don't we? I usually grab what call here, 'mixed rice' or 'economical rice' for lunch. Consisting of rice, 2 vegetable dishes and a meat dish, it usually costs between $3.10 and $3.50. Pretty affordable.

But if i were to pack a sandwich from home for lunch, that would cost me $0.50 instead, saving about $2.50 per day. Over the course of 252 working days, that's $756 saved a year that can go towards investments.

Daily coffee fix

Coffee here isn't cheap. Even the one at the local coffee shop sets you back around $1.50 for a cup of iced coffee. Hot coffee is cheaper but the weather here is so damned hot i don't know how people can drink hot coffee if it isn't raining.

Again, $1.50 doesn't sound like much, but if you were to grab one a day, over the 252 working days, that adds up to $378.

Compounding

So just by scaling back on lunch and cutting out the coffee, that saves over a thousand dollars per year. Pretty neat in and of itself but i think where the magic really happens is if we invest this money.

If we were to invest this $1,000 every year for 25 years in a large cap ETF. Assuming a 6% average rate of return, at the end of 25 years, we would have $60,000. In 30 years, it snowballs to $85,000. Nothing spectacular but it's a pretty safe investment.

I was also thinking of using a portion, say $100 for more aggressive investments. Let's say you have an investment that gives 3% daily. Are there any out there? I was thinking of bets on heavy favorites in sports matches. Some luck and good money management is needed but if you were able to compound and get an averaged out 3% daily return on $100, at the end of a year, you would have $4.8 million.

I've clearly oversimplified things (book limits, loss during a streak etc.) but this is just a thought. Either way, the money saved presents you with options and it never hurts to have a bunch of good ones.