while I was having lunch

September 30, 2008

life economy

So I decided to head out to lunch with a buddy from work today, and while I was out the world went insane. Both parties in the house of representatives worked together to defeat the $700B bailout plan, the Dow Jones had its largest single-day point drop in history, and our publisher (a 41 year bee veteran), Ray Steele resigned. A new guy, Will Fleet, will be taking the reigns in two weeks. Needless to say, I was a little shocked when I came back.

0.5M dollars worth of soda

September 17, 2008

life finance

Huge pile of crushed soda cans How much do you like your favorite carbonated soft drink? Are you spending about $20 per month on soda? Lets see what would happen if you chose to invest that money in a regular annuity earning 11.6% interested (this historic return of the S&P 500 since its inception in 1926). I’ll assume that a daily soda habit costs $20 per month or $240 per year. Lets start with an 18 year old person who has chosen to place her soda money into an annuity every month. Forty years later, her annuity will be worth $497,922.

That number (in 40 years from now dollars) isn’t easily comparable to current dollars. I’ll use the consumer price index for the last 40 years (January 1968 to January 2008) to adjust this number to something that’s hopefully closer to real dollars.