We are officially living in the era of show and tell. Personal belongings almost don’t exist unless you’ve documented it on social media for all to see. I won’t front, I’m often drawn to a luxury and flashy label, but I don’t indulge nearly as much as I did in my younger years. My purchases these days are weighed more by math equations and rates of returns, than by “likes” on the gram.
Everyone has a favorite celebrity that we often obsess over and follow on multiple social media platforms. If we’re watching them closely enough, we’re often influenced to purchase their latest shoes or bags as a way of feeling equal or just as lit. This can be a dangerous habit to adapt, as most of us aren’t playing with nearly as much money as our WCWs or MCMs.
Let’s take Cardi B for example. Love her or hate her, you’re more than likely watching her and can’t get away from her huge and authentic personality. Since she ain’t gotta dance now, she recently topped the news outlets for having purchased 2 lamborghinis; one for herself and one for her hubby, Offset. When challenged and accused on social media of having leased the vehicles, the ever outspoken Cardi B, quickly provided the receipts of her cash withdrawal for over half a million dollars ($548,736.97 to be exact), in order to cash out on the 2 luxury vehicles.
If you’ve been following or reading from me for any period of time, you’ve heard me say, “it doesn’t matter how much money you make, it matters how much you keep”. And since I’m all for a good money move, let’s break down that purchase and look at the money.
There are financial products that gross on average (before fees) 7% annually on a compounding basis. Compounding is the best environment to have your money because the money grows on top of itself including the return, over and over again.
Had Cardi B taken that same $548,736.97 and invested it for 30 years at a 7% annual return, that amount would have grown to a whopping $4,177,125.77! The same withdrawal she made to purchase 2 vehicles, could have returned her over 4 million dollars, even if she never invested another penny in that account.
On the contrary, had she decided to lease the same 2 lambos, her payment would have been $9,898 for 3 years, totaling $356,328. (She would have had to put down close to $90,000 to start the leases, but we’re just comparing apples to apples here.) $10,000 per month might seem excessive to pay monthly for cars, but in comparison to the alternative and lost opportunity of investing $548,736.97, it’s a payment you could more than likely learn to live with making.
Many people argue between paying cash and financing items, but when you’re considering the option between a depreciating asset such as a car and a compounding investment opportunity, the choice should be clear. Whenever the Cephus’ decide they’re over the lambos and want something else, how much do you think they’ll be able to flip and tumble them for? They more than likely won’t return anywhere near the half a million she paid for them.
Sometimes when large or consistent amounts of money start coming in, people aren’t as concerned about the future or rates of return; they live for the moment and reward themselves for today. Even with other investments and financial futures secured, a half a million dollars blown in one depreciating transaction, is a lot to stomach. Think about the large items you’ve cashed out on, and then think about how much money you could potentially have, had you invested that same amount. How does that make you feel?
If you’d like to see how your money would perform in a compounding environment, let’s talk about your options.