Investing in ETFs instead of lighters: The financial gain from quitting smoking
Wealth Growth through Quitting Smoking: Investing in an ETF instead
Today marks World No Tobacco Day, prompting a consideration of the financial implications of quitting tobacco use. According to a model calculation by comparison portal Verivox, an individual could amass a substantial fortune by investing the money typically spent on cigarettes wisely in an ETF over several decades.
The calculation takes into account the continuous increase in cigarette prices. A pack of cigarettes of the most popular brand in Germany currently costs approximately €8.70, with daily smokers spending around €265 monthly and €37,600 over ten years or €169,000 over 30 years. Assuming a rate of price increase at an average of 3.7 percent per year, as observed over the past 20 years, these figures could escalate significantly.
Harnessing the Power of Compounding
If an individual is able to quit smoking and invest the saved money in an ETF based on the global stock market index, MSCI World, they could accumulate a portfolio value of €502,712 in 30 years. This calculation assumes an historical net average annual return of about 7.5 percent for the MSCI World and an increase in savings matching the rate of cigarette price rises, annually reinvesting the earnings in a thesaurizing ETF.
The advantage of this so-called thesaurizing ETF lies in the increasing influence of compound interest over a lengthy investment period. After just ten years of saving, the portfolio value in this scenario approaches €54,000. After 30 years, the portfolio value nears €503,000, with only about one-third of the total value originating from the saver's own contributions, the remainder stemming from profit and compounding.
It is crucial to note that this model calculation is a representation of the potential for growth resulting from compounding over an extended period. Market fluctuations and crashes pose risks as factors that cannot be controlled. Therefore, it is essential for investors to maintain their investments over a long time frame and be prepared to weather such market downturns.
The German consumer advocacy group Öko-Test deems nicotine replacement products ineffective in kick-starting a long-term smoking cessation. However, for those seeking guidance in quitting smoking, RTL will air the program "Finally Non-Smoker!" on Saturday, May 31, 2025, at 12:30 PM, featuring guests Wolfram Kons, Lilly Becker, and Christian Häckl.
Sources: ntv.de, awi/dpa
- Health Hazards
- Health
- Smoking
- Investment
- ETF
- Stock Fund
- DAX
In light of the financial potential of quitting smoking, one could reallocate the money spent on tobacco towards vocational training or personal finance, specifically investing in a stock fund like an ETF or a thesaurizing ETF. For instance, if an individual invests the amount typically spent on cigarettes over 30 years in an ETF based on the global stock market index (MSCI World), they could amass a portfolio value of €502,712, with the majority of the value coming from profit and compounding.
