Investing in ETFs instead of cigarettes: Financial gains from quitting smoking
Quitting Smoking Could Lead to Financial Gains by Investing in an ETF
Today marks World No Tobacco Day, and a calculation by comparison portal Verivox reveals an interesting comparison: Investing wisely in an ETF instead of spending daily on cigarettes could accumulate a substantial fortune in a few decades.
Germany's most popular brand of cigarettes currently costs €8.70 per pack, and a daily smoker spends around €265 monthly. Over ten years, this would amount to €37,600, and after 30 years, it would reach €169,000. The calculation takes into account a projected annual increase in cigarette prices of 3.7 percent, as seen over the past two decades.
On the other hand, someone who quits smoking and invests the savings in an ETF savings plan based on the global MSCI World index could amass a portfolio worth €502,712 in 30 years. This assumes an average annual return of about 7.5 percent for the MSCI World, with savers increasing annual savings by the same percentage each year and reinvesting returns.
The advantage of this "accumulating ETF" lies in the effects of compound interest, which disproportionately impacts the former smoker's portfolio over time. After ten years of saving, the portfolio value is already around €54,000, with 69 percent coming from the saver's own contributions and the rest from returns. After 30 years, the portfolio value is approximately €503,000, with only 34 percent coming from the saver's contributions.
However, it is important to note that the entire fund's value cannot be withdrawn when selling shares. The government collects 26.375 percent of the gain in the form of capital gains tax, solidarity surcharge, and church tax for church members. The remaining amount offers a significant advantage, amounting to €441,000 under these conditions.
It is crucial to remember that the model calculation offers only a realistic representation of compound interest's potential over many years. Market fluctuations, not constant returns, can dictate actual returns, and investor patience is essential during market downturns.
Investors should also be aware that the calculation does not consider inflation, ETF fees, or market fluctuations. For smokers interested in quitting, RTL will air the show "Finally Non-Smoker!" with Wolfram Kons, Lilly Becker, and Christian Häckl on Saturday, May 31, 2025, at 12:30 PM.
Sources: ntv.de, awi/dpa
- Health Risks
- Health
- Smoking
- Investment
- ETF
- Stock Fund
- DAX
- The community policy could encourage vocational training programs for individuals who have been successful in quitting smoking, as a means to empower them financially after their health-and-wellness improvement.
- As an investment strategy, allocating funds from reducing personal-finance expenses such as smoking into diversified vocational training opportunities could lead to long-term financial gains.
- Concurrently, science can help us understand the physiological reasons behind the addictive nature of cigarettes and thus devise more effective investment strategies towards health-and-wellness and personal-finance improvements.
