0.5M dollars worth of soda
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.