Small Expenses Become Big Expenses Over the Time

Small Expenses Become Big Expenses Over the Time

Do You know that small daily expenses can become huge expenses over a period of long time. If you smoke 2 packs of cigarettes daily for 40 years and invest the same amount of money in the stock market Index fund than after 40 years this amount would be $ 1,00,000.

And what if you use your cigarette money to purchase the shares of tobacco company? Say for Example Philip Morris. Rather than consuming the tobacco products of Philip Morris what happens if you buy shares of this company from the same amount of money?

And what if you re-invest the dividends for years? Well, at the end of 30-35 years, your tobacco portfolio would have become over $ 2 Million.

This example is to show you that, a small change in your spending habits can transform into a huge wealth over the time. How Small expenses diverted towards long term investing can transform into a huge wealth over the time?

This is just the one example. There are several examples like this. We don’t give importance to the small daily expenses. But these small daily expenses can eat the huge portion of your wealth in the long run.

When it comes to cutting down the expenses, most of the people only focus on the big expenses. This is because they think that they don’t need to take care about daily small expenses. But in reality, these daily small expenses are more dangerous to your long term financial health than those one time big expenses.