In this age of fintech, we see all sorts of empty promises and deceptive claims.
One I want to address today are the apps that let you “save” money for your’s or other children’s futures, namely in the form of 529 college savings accounts or savings accounts of any kind.
I will forego the 30-page technical analysis to break down the flaws and opportunity costs that make such use of your money inherently a monumental waste of opportunity. Instead, I will present you with a simple example that will hopefully change your perspective on not only these types of fintech, but the entirety of your perspective and approach to saving for your children’s futures.
Have you seen Pawn Stars? Chances are you have, and if you haven’t, to sum the takeaway of the show up briefly: Anything of marginal value today - if kept in pristine condition (ie in a storage locker) - will be worth infinitely more by the time you die of old age.
For simplicity, we will use the 2022 national average interest savings rate of 0.13% and generously increase it tenfold to 1.3%. (Generously again) let’s compound that rate continuously as opposed to annually, in 50 years, your $1000 contribution will be worth $1,915.54 - calculated using continuously compounded interest at 1.3%
Let’s see if you take an alternative, pawn stars-esque route.
Given $1000 in uncirculated current year $0.25 cent quarters. In 50 years, regardless of mintage, and discounting the hidden treasures of error/limited coinage and other possible appreciating factors, according to PCGS/NGC & coin value appreciation throughout history, those 4000 uncirculated coins will be worth no less than - based off a 50-year old 1973 (note for parity, that I chose 1973 and not 1972, as 1972 and pre 1972 quarters, half-dollars and dimes were minted with 90% silver content, whereas post-1972 we do not have abnormally high melt values of coinage due to content) quarters in uncirculated grading of BU-65 (aka the base grading of those uncirculated current year quarters you’d invested in) have a current market value of $6.65 each.
Simple math will determine that the 50-year value has appreciated by over 26,000%.
So, your 2022 common quarters valued at $1000 today would be worth in excess of $26000 in 50 years. This, being one example of a quite literal infinite alternative options you have, hopefully opens your eyes and minds a bit to see that there is far more value in escaping institutionally instilled functional fixation in thinking and approach.
Do your own investigation and due diligence, and realize that institutions do not benefit from individual deviations from their expectations. I don’t gain anything from making this PSA, maybe a few views or clicks, and to offset any potential gains, I’ve made a charitable donation of $1000 to my favorite local charity, Pug Nation of Los Angeles.
Take care everyone, different is not always better but it definitely is never worse to think for yourself and not subscribe by default to the institutional rat race of perpetuating the status quo.