{"id":182407,"date":"2017-07-07T19:00:08","date_gmt":"2017-07-07T17:00:08","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=182407"},"modified":"2017-07-07T18:00:32","modified_gmt":"2017-07-07T16:00:32","slug":"why-your-daily-coffee-is-stopping-you-from-becoming-a-millionaire","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/182407\/why-your-daily-coffee-is-stopping-you-from-becoming-a-millionaire\/","title":{"rendered":"Why your daily coffee is stopping you from becoming a millionaire"},"content":{"rendered":"

Grabbing a cup of coffee on the way into the work is a routine act for many South Africans but it’s a guilty pleasure that can make a major difference to your wealth, according to\u00a0investment actuary Hildegard Wilson and the Actuarial Society of South Africa (ASSA).<\/p>\n

Wilson, who is a member of the ASSA’s Investment Committee, notes that with rising costs of living, increasing your savings can often seem like a pipe dream but is still obtainable by making minor changes.<\/p>\n

As part of the awareness surrounding\u00a0Savings Month (July), she crunched some of the numbers to demonstrate how cutting out just one guilty pleasure a day could make a major difference to your current wealth.<\/p>\n

\u201cThe numbers prove that there is hope, and that you can reach your goals without compromising your overall standard of living,\u201d she said.<\/p>\n

\u201cWith the power of compounding, where growth on your investment earns additional growth, these kinds of small breadcrumb savings can turn into large amounts over time.\u201d<\/p>\n

\n

Scenario<\/b><\/span>\u00a01 – Cutting out a\u00a0daily cappuccino<\/strong><\/h3>\n

\"\"<\/a><\/p>\n

“If you were to buy a medium daily cappuccino every weekday at a cost of R24.90 each, your caffeine habit would be costing you R498 a month,” said Wilson.<\/p>\n

“Say you now decide to give up the cappuccinos, scrounge around for another R2 in your monthly budget, and commit to investing R500 in a South African Multi Asset High Equity unit trust portfolio every month instead.”<\/p>\n

“SA Multi Asset High Equity portfolios delivered average annual returns of 8.2% in the 10 years to the end of March 2017.<\/p>\n

“While this figure is historic and offers no guarantee of future performance, if your investment were to achieve an average 8.2% annual return, you would have just over R37,180 after five years<\/strong> and\u00a0R93,130 after 10 years.<\/strong>”<\/p>\n

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Scenario 2 – Quitting smoking<\/strong><\/h3>\n

\"\"<\/a><\/p>\n

“In this scenario, if you were a conservative smoker who smokes just three packs of cigarettes a week at a cost of R38.50 each, this means that you would be spending R462 on cigarettes every month,” said Wilson.<\/p>\n

“Say you now decided to take the plunge and quit smoking. To avoid the temptation to spend your cigarette money elsewhere, you invest the R462 you would have spent in a separate savings account at the beginning of every month.”<\/p>\n

“You stay committed to your goal, and after a year you have a total of R5,544 saved<\/strong>.”<\/p>\n

Wilson noted that the money being saved by cutting out smoking would not only be reflected in how much you are saving through cutting back on buying costs.<\/p>\n

“Since you have not smoked in the past 12 months, you next approach your life insurer to adjust your life insurance premiums to non-smoking rates based on your healthier lifestyle.”<\/p>\n

“If you had purchased R2 million life cover as a young healthy female who smoked, your monthly premiums may cost R380. As a non-smoker, your new monthly premium could be as little as R190, saving you an additional R190 every month<\/strong>. This would bring your total monthly savings to R652.”<\/p>\n

“You then invest your lump-sum and the additional monthly savings in a SA Multi Asset High Equity unit trust portfolio, which delivers the same 8.2% average annual returns. This means that you would have R56,820 saved after five years, and after 10 years you would have more than double the amount saved with R134,000<\/strong>.”<\/p>\n

In contrast, Wilson noted that\u00a0a young, healthy male who smoked, also with R2 million life cover, would pay life insurance premiums of around R592 every month.<\/p>\n

“After submitting to a blood test to prove that you have quit smoking, your monthly premiums could be reduced to R294, saving you R298 every month.”<\/p>\n

“You also invest your R5,544 lump sum in a SA Multi Asset High Equity unit trust portfolio, and top your investment up with the monthly R760 that you are saving in cigarettes and life insurance premiums.”<\/p>\n

“If your investment achieved the same return as above, this means that you would have R64,860 after five years and R154,110 after a decade<\/strong>.”<\/p>\n

\n

Read:\u00a0How much money the average person in South Africa gets paid right now<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Grabbing a cup of coffee on the way into the work is a routine act for many South Africans but it’s a guilty pleasure that can make a major difference to your wealth, according to\u00a0investment actuary Hildegard Wilson and \u00a0the Actuarial Society of South Africa (ASSA).<\/p>\n","protected":false},"author":10,"featured_media":182409,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26],"class_list":["post-182407","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/182407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=182407"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/182407\/revisions"}],"predecessor-version":[{"id":182971,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/182407\/revisions\/182971"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/182409"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=182407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=182407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=182407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}