The financial cost of eating out for lunch

The financial cost of eating out for lunch

Today I’m going to discuss the true financial cost of eating out for lunch.  You may be wondering as to where I’m going with this.  Some people may say, eating out is no big deal.  Everyone does it.  I deserve to treat myself. Since this is a investing blog there will be a investing twist.  I noticed over the years of my 20+ years of being in the workforce that eating out can get expensive.  I for one enjoy going out to lunch on occasion, but predominantly I pack a lunch daily.  This has always been a topic of discussion and a thought I have had for many years that eating out is very costly overtime.  I never decided to truly investigate up until a couple weeks ago I bought McDonald's for my wife and I.  I don’t remember the exact dollar amount, but the total was over $13.00. 

                The $13.00 bill caught my attention.  I said you must be kidding me talking to myself and laughing as I pulled away from the McDonald's drive thru.  That is when I decided to dig a little deeper and quantify the true cost of eating out.  I’m going to use my favorite fast food spots and food selections to run the numbers.  Now instead of spending money on eating out I wanted to see what that same money invested in the stock market based off an average 8% rate of return would look like.  I based the length of time invested off 20, 25 and 30 years.  The results were amazing.  See for yourself!

-McDonald's-Quarter Pounder with cheese meal/$6.35

-Panera- Frontega Chicken/$8.55

-Jimmy Johns- Turkey Tom/$5.59

There is an ever-growing concern of people not having enough money saved for retirement. The primary objective behind analyzing eating out for lunch was to provide one of the many ways to uncover money that we could use for retirement.  By saving as little as $5.59 a week by choosing to not eat out once a week will provide you with $52,596 invested for 30 years at an average 8% return towards retirement.  You can see by the numbers that contributing more will only put every one of us in a better position financially for retirement.  It’s never too late to start.  Hopefully, I was able to provide a different perspective on how to save.  That by choosing to save a little money over time can turn into a substantial amount of money.  Compound interest is a beautiful thing and should utilized on the path towards retirement.

Below is the compound interest calculator I used to provide the numbers given in the examples.  It’s a very helpful tool to use to get a quick answer on compounded returns.

http://moneychimp.com/calculator/compound_interest_calculator.htm

Have a wonderful weekend!

Clay-

Questions-feel free to send an email to wheatleycsmk@gmail.com

I'm not a licensed financial advisor. All recommendations is strictly my personal opinion and the information is intended for learning purposes only. Invest at your own risk!

The Power Of Dividend Reinvestment. Harness The Power!

First I would like to say Wow! What a great day for the stock market! I have been looking for a positive day like this for weeks. The Dow up 273.28 to close up 2.76% to 10,172.53 I also enjoyed the nice action in WFT-Weatherford International. Finally the market has given this stock a little respect up 6.81% on the day. We still have a long push upward with this company.

Today I’m going to talk about the power of dividend reinvestment. You may say what is a dividend?

A Dividend is a portion of the earnings a company generates to give back to the shareholders of the stock. A large portion of companies pay out a dividend on a quarterly basis to their shareholders, meaning every 3 months.

For example Coca Cola Company ticker symbol (KO)

Pays out a $1.76 a year in dividends and at the current price of $52.45 that would yield a return of roughly 3.4% a year. That means every 3 months you would receive .44 cents for every share that you owned. Not to bad! That is definitely better than what you receive for the money you have parked in your savings account.

Now that we know the definition of a dividend I want to really explain the true power of reinvesting the dividend. Reinvesting the dividend is essentially buying more stock with the dividends you would receive on a quarterly basis. Well continue to use Coca Cola Company (KO) as an example.

Ex: Let’s say you bought 1,000 shares of KO.  Every 3 months you would receive .44 cents a share.

.44 x 1,000=$440 or $1,760 a year.

Say you reinvested those dividends for 30 years and never touched the stock and the price of the stock didn’t appreciate and stayed the same your initial investment of 1,000 shares would turn into 2,636.91 shares and you didn’t do a darn thing. That means:

1,000 shares at 52.45 would be $52,450

After 30 years your initial investment of $52,450 would have grown to a whopping $143,008.44 that’s a 172% return on your money. That was all created by reinvesting and compounding the dividend. You may say okay that’s a lot of money but I’m not really impressed. Check this scenario:

Same investment of 1,000 shares of KO at $52.45 and you reinvest your dividends, but now you also take advantage of the actual stock appreciating in value. Let’s say KO stock grows at an 8.5% rate of return annually. Your initial investment of $52,450 would have grown after 30 years to an amazing total of 1,529,847.31. That’s roughly 2,816% return on your money. You would have made $1,477,397.31 over 30 years. 1.4 million dollars!!!!

Don’t believe it! Check out this link and plug in the numbers

http://www.hughchou.org/calc/drip.php (this is where I pulled all my numbers and I give full credit to this site for a great product)

So in the end dividend reinvestment is the way to go! Harness the power of compound interest and in the long term you will see great results. Some great examples of dividend stocks you may want to check out are the following- (KO)-Coca Cola Company, (PEP)-Pepsico, ( JNJ)-Johnson and Johnson, (KMP)-Kinder Morgan Energy Partners, (MO)-Altria, (XOM)-Exxon Mobil, and (CAT)-Caterpillar to name a few.

If you invested correctly you could have a portfolio that consists of dividend paying stocks. Once in retirement you can pull a portion (a %) of the dividends to use as income to live on and let the rest of the dividends grow by reinvesting to continue to grow your nest egg. Make your money work for you! You have worked hard for your money and now its time to repay yourself!

I would also like to share a great website. I came across this site and have read a few of the articles and the information is very beneficial to all that would like to learn more about dividend stocks to grow their portfolio. This person has great insight!

http://www.dividendgrowthinvestor.com

Thank You,

Clay-

Have a Question? Send Questions to wheatleycsmk@gmail.com

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It’s Never Too Late To Start Investing!

Today I want to talk about investing for the future.


Why do we invest? There are many reasons to invest your money. The most common reason that comes up in a conversation is Retirement. I’m here to tell you that investing for the future is essential. I here a significant amount of people in the media and everyday life stating they don’t have enough money to invest. Yes we all have certain financial obligations, but that isn’t a good enough reason to not save a little money for a rainy day.

The key to investing and saving for the future is to simply start. Starting is half the battle. Not starting could cost you 100’s of 1,000’s of $$$ down the road. Procrastination is not part of your future financial well being! It’s never too late to start!

The figures below are a few calculations I compiled to show what just a few dollars invested over a set period of time can turn into a substantial amount of money. This displays how long term investing really adds up.

Interest rates are hypothetical and are not guaranteed.


Age: 20
Monthly Contribution   /   Final Nest Egg:
$40                                                               $730,184.47
$80                                                               $1,460,368.93
$160                                                             $2,920,737.86
Invested (Yrs): 45
Retirement Age: 65  
Interest Rate: 12%      

Age: 30

Monthly Contribution   /   Final Nest Egg:
$40                                                               $232,062.30
$80                                                               $464,124.59
$160                                                             $928,249.18
Invested (Yrs): 35
Retirement Age: 65
Interest Rate: 12%

Age: 40

Monthly Contribution   /   Final Nest Egg:
$40                                                               $71,680.29
$80                                                               $143,360.58
$160                                                             $286,721.15
Invested (Yrs): 25
Retirement Age: 65
Interest Rate: 12%

Age: 50

Monthly Contribution   /   Final Nest Egg:
$40                                                               $20,041.57
$80                                                               $40,083.15
$160                                                             $80,166.30
Invested (Yrs): 15
Retirement Age: 65
Interest Rate: 12%

These numbers show how the magic of compound interest works to your advantage. You might ask, what is compound interest? Compound Interest means that each time interest is paid, it is added to or compounded into the principal and thereafter also earns interest. Definition pulled from http://www.extension.iastate.edu/agdm/wholefarm/html/c3-05.html
Calculations came from an investment calculator.  Feel free to input your numbers!
http://www.moneychimp.com/calculator/compound_interest_calculator.htm


This calculation above was part of the reason I started to invest 8 years ago. $40 a month is definitely obtainable for most. For instance $40 a month could be 1 trip to a nice restaurant, purchasing a drink and a bag of chips at work daily, or eating out for breakfast on a routine basis. Yes these examples may not pertain to you, but think real hard of what you might give up for a chance of financial freedom in retirement.

Remember it’s never too late to start investing!

Thank You,

Clay-

Have a Question?  Send Questions to wheatleycsmk@gmail.com
New Content every Thursday and Sunday. 
Occasional Stock Market Commentary during the week.
Feedback Welcome!
Interested?  Please become a follower