A daily coffee is worth $65,000 after 23 years
I came to coffee late. It wasn’t until a severe bought of insomnia in my early 40s that I finally discovered coffee. I’ve always been interested in the cumulative cost of daily habits though, so I ran the numbers and found that if I’d bought a daily week-day coffee from the beginning of 2001, when I started full-time work, through to today, I would have spent around $22,729 on the coffee.
However, the amount invested daily in the ASX All Ordinaries index (the “coffee strategy”) would currently be worth $64,987. Consequently, over anearly 24-year period, a daily coffee habit costs $42,258 in lost passive earnings.
The coffee strategy delivers $42,258 in passive value
As shown in Table 1,the total return of the $22,729 investment made over almost 24 years is 186%,representing an IRR of 8.7% (slightly better than the 8.5% of the All Ordinaries over the same period).
The strategy was based on a current $5.00 coffee, with prices reduced annually by CPI (at 20c increments), implying a coffee in 2001 cost $2.60.
Sushi strategy delivers $130,000 in passive value
Applying the same methodology to a daily $15.00 sushi lunch implieslost earnings of almost $130,000 on a cost base of just under $70,000. We decided this is probably a fairly modest cost of lunch (especially in Sydney*), and so we haven’t adjusted for the substitution cost of eating last night’s leftovers or bringing your own sandwich.
Today, the sushi strategy would be worth $198,647.
* A quick survey of local menus suggested an average daily lunch cost of almost $19.