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Tuesday, January 29, 2013

Stop smoking young and retire a millionaire

Smoking is a costly habit as every tobacco addict will tell you - and over the past 10 years or so massive tax hikes have made it almost double in cost. 

The current price for a packet of cigarettes stands at between £7 and £8, depending on brand, meaning that the average 20-a-day smoker spends over £50 each and every week on their habit. 

Save £50 a week throughout your adult life and you will end up with almost £120,000, which is a fair amount of money in most people’s book. However, put the same amount of money into a particular type of pension scheme and you could multiply that amount significantly.

Stop smoking

Paul Claireaux has produced a set of figures for the Investor’s Chronicle detailing how, by investing wisely, a 20-year-old smoker who quits and saves the money in a pension fund could be a millionaire by the time they retire. 

A person who has access to a good company defined-contribution scheme, where their employer pays 60% of what they pay and the employee also receives a 20% relief on income tax, will have just shy of a million if they pay in their £50 per week for 45 years, or from age 20 to age 65. 

Quite a significant amount more than the original £120,000, this could be the incentive smokers everywhere are looking for to finally quit.

Switching to e-cigarettes instead of quitting could still save you a significant amount of money. It is estimated that the nicotine vaporisers that are becoming more and more popular cost approximately half as much as regular cigarettes.

Saving £25 a week and continuing to inhale nicotine whenever you choose may not make you a millionaire, but it will leave you with a pretty nice nest egg, and more importantly you are more likely to still be around to enjoy it.

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