Investing in ETFs as an Alternative to Kicking the Habit: Generating Fortunes from Quitting Smoking
World No Tobacco Day serves as a stark reminder of the financial benefits that could be reaped by individuals who opt to eschew smoking and instead invest their savings wisely. In a intriguing model calculation conducted by the comparison portal Verivox, it is revealed that foregoing daily purchases of cigarettes and instead investing the money in an Exchange-Traded Fund (ETF) could yield a substantial fortune in a mere few decades.
More specifically, the calculation demonstrates that those who abstain from smoking and invest 30 years' worth of daily cigarette expenditure in an ETF can amass a sizable fortune of over half a million euros. This astonishing figure assumes a conservative annual return of 7.5% for the ETF, which aligns with the MSCI World's historical net average annual return.
To calculate this accumulated wealth, Verivox took into account the average increase in cigarette prices, which has historically risen by 3.7% each year. Using this assumption, a daily cigarette buyer who smokes a pack of 20 every day would spend approximately 265 euros per month. The total expenditure in 10 years would amount to 37,600 euros, and in 30 years, it would surpass 169,000 euros.
However, those who embark on this transformative journey can expect the power of compounding to significantly enhance their prosperity over the years. By availing of an accumulating ETF, the saver's initial contributions, as well as the returns generated, can amplify the portfolio's value exponentially. According to the model calculation, a saver who stops smoking and invests their savings for 30 years in such an ETF could possess a portfolio worth around 502,712 euros.
It is essential to note that taxes would be levied on profits from the sale of ETF shares, with approximately 26.375% going to the government as capital gains and solidarity tax (and church tax for church members). Nevertheless, the remaining amount—around 441,000 euros—remains an impressive figure that underscores the significant financial incentives linked to quitting smoking and investing wisely.
However, it is crucial to acknowledge that the model calculation is only indicative, and real-world returns can fluctuate due to factors such as market volatility. Therefore, it is essential for investors to maintain a long-term outlook and be prepared to weather potential drops in the market.
For those interested in seeking help to quit smoking, it is recommended to tune into RTL on Saturday, 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
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- Pondering the example from Verivox's calculation, continued investment in a vocational training program instead of daily cigarette expenses could potentially yield a substantial fortune in the future.
- The science behind health-and-wellness suggests that quitting smoking and allocating those funds towards personal-finance ventures like investing in a vocational training program could lead to substantial financial gains in the long run.
- With the understanding that a 30-year investment in vocational training could accumulate a substantial amount, one may consider finance options like investing in an ETF, mirroring the strategy employed by those abstaining from smoking and investing their savings.
