How Drinking Kopi Can Help to Increase Your Wealth

Every morning, I need my daily fix of coffee before I can start my day. It gives me the much-needed jolt before I hit the workplace.

Luckily for me, I prefer the kopi I make at home instead of a cappuccino at a café that can easily cost S$6 or more per cup.

I reckon my home-made kopi costs below 70 cents. But for a ball-park figure, let’s take the price to be S$1.10, which is also the average price of kopi at a hawker centre.

With around 260 working days (for a five-day work week) per year, my home-made kopi would cost S$286 in total.

An atas coffee at an atas café would set me back by S$1,560, assuming a price of S$6 per cup.

This translates to a difference of S$1,274 between my kopi and a cup of atas coffee.

Here comes the magic.

If the difference is allowed to compound for a period of 10 years at 7.4% annually, the final figure would be S$2,601. That’s more than double what I started with.

(7.4% is not a figure pulled from thin air. The SPDR STI ETF (SGX: ES3), an exchange-traded fund which mimics the fundamentals of the Straits Times Index (SGX: ^STI), has returned 7.4% per year, including dividends, since April 2002.)

Well, I must admit. What I have demonstrated above is not really magic.

The above example might not make a dent in our overall financial well-being but the lesson here is the mindset that needs to be cultivated.

By going for non-branded, yet functional items, and investing the difference for the long-term, we can slowly build our wealth. A cup of kopi, if slapped with an atas brand, can easily fetch S$10 per cup – but the underlying ingredients would largely be the same.

Can you think of other everyday examples that you can save money on and put in the stock market instead?

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P.S. I’m craving for some atas coffee now.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns units in SPDR STI ETF.