Transforming cigarette investment to ETFs: Capitalizing on quitting smoking for financial prosperity.
Building Wealth Through Quitting Smoking: Investing in ETFs
Today marks World No Tobacco Day, prompting a reflection on the financial implications of smoking cessation. A model calculation by comparison portal Verivox reveals that investing the money saved from quitting smoking in an Exchange-Traded Fund (ETF) could result in a substantial fortune within a few decades.
The fiscal benefits are striking. Half a million euros: that's the potential accumulation over three decades, if an individual who previously spent daily on a pack of cigarettes instead invests that sum wisely. Patience is necessary, though, as the result materializes only after more than three decades of diligence and abstinence.
In Germany, a pack of 20 cigarettes of the most commonly consumed brand costs €8.70. A daily smoker spends around €265 per month, totaling €37,600 over ten years and €169,000 over 30 years. Verivox's calculation assumes that cigarettes, like in the past two decades, will continue to increase in price by an average of 3.7 percent annually.
The crux of this hypothetical scenario lies in the power of compounding over time. By quitting smoking and investing the saved funds in an accumulating ETF based on the global stock market index MSCI World, an individual can amass a portfolio worth €502,712 in 30 years. This presumption hinges upon the MSCI World maintaining its historical net average annual return of approximately 7.5 percent. Additionally, it assumes annual savings increases at the same rate as cigarette price inflation, and that the ETF automatically reinvest any returns.
In ten years, this ETF savings plan would yield a portfolio value of around €54,000, with roughly two-thirds coming from the saver's contributions and the rest from returns. After thirty years, the portfolio value would approach €503,000, with only a third coming from the saver's contributions, while the remaining value stems from returns and the power of compounding.
When contemplating selling shares, one should bear in mind that one cannot retain the entire fund's value. Taxes of 26.375 percent will be levied on gains, consisting of capital gains tax, solidarity surcharge (plus church tax for church members). Nevertheless, the remaining balance—€441,000—is still an impressive sum.
It is crucial to recognize that this calculation merely provides a glimpse into the potential benefits of compounding interest over an extended period. While returns are not consistent year after year, and stock markets fluctuate, it is essential for investors to maintain their holdings during financial downturns.
For those wishing to quit smoking, tune in to RTL on May 31, 2025, at 12:30 PM for the show "Finally Non-Smoker!" featuring Wolfram Kons, Lilly Becker, and Christian Häckl.
Sources: ntv.de, awi/dpa
- Health Hazards
- Health
- Smoking
- Investment
- ETF
- Stock Fund
- DAX
The concept of 'investing' in Exchange-Traded Funds (ETFs) as a result of quitting smoking is not only linked to improved 'health-and-wellness', but also has potential implications in 'personal-finance'. By putting the money saved from quitting smoking into a well-chosen ETF, such as one that follows the MSCI World index, the power of compounding over time could turn those savings into a significant 'fortune' within three decades. This 'community policy' of promoting health and financial literacy could be further enriched through 'vocational training' programs in personal-finance and 'finance', focusing on investments and stock markets. Such training could empower individuals to make informed decisions when it comes to building wealth and preserving their savings for the future.
