Written by Mathieu Sabourin, Assistant Consultant, B.Comm., C.Adm., F.Pl.
September 16, 2013
For some, fall represents the beginning of the school year, the end of summer or the start of the hockey season. For me, this is the time when Apple releases its new iPhone and iPad. As any Apple fanboy, I can’t wait to get my hands on them and I’m going to get both as soon as they come out.
As a financial planner, I asked myself this question: what is the financial impact of this annual purchase on my financial future? And, to have a little fun, I tried to calculate what it would represent if, instead of spending it, I deposited the amount in an RRSP in anticipation of retirement.
After selling my old iPhone and iPad and buying the latest models, with all the required accessories, I will have spent approximately $1000. Assuming that I still have 25 years to work and I get a 3.75% rate of return within my RRSP, my hypothetical annual savings of $1,000 would be worth approximately $40,000 by the time I retire. If I live for 25 years after that, this represents an annuity of more than $2,500 (in 2013 dollars).
For someone younger, who has 35 years to go before retirement, the annuity would be $4,500, and it would be nearly $5,800 for someone five years younger. If the rate of return were 5% instead of 3.75%, the numbers jump to $3,400 for me and $5,000 and $6,700 respectively for the two younger guys.
On second thought, maybe I shouldn’t have done this calculation because I’m getting a new iPhone anyway… but at least now I know the real cost of that iPhone and so do you!
iPhone 5 16GB White (16GB iPhone 5s Space Grey as of September 20th …)
iPad 3 32GB White
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