I know, it can be very tempting to get in line for the “opportunity” to pay Apple (AAPL) a few hundred dollars as well as a reasonable $50-100 per month in order to get your hands on that next iPhone. I am very much tempted myself even though I do already have a smartphone that works well, an iPod touch. You would think that would be enough right? But somehow, it doesn’t feel that way. Why? All of those new and exciting features that will coming along on the iPhone 4s are certainly going to be talked about, be very exciting and give you access to all kinds of new apps, etc.
I Have News For You
I think it’s important to always think twice about chasing the next big thing, especially in the technology field. Always holding the most recent iPhone or tech gadget is certainly fun. But where does it end? Are you considering your opportunity cost here? What if instead of upgrading both this year and next year, you skipped this one and invested that cash amount into something more “sustainable“?
Evaluating The Cost And Benefits
As you can imagine, I think one way to look at the money you could save is to look at an investment similar to our Ultimate Sustainable Dividend Portfolio. Why? Because those stocks pay decent dividends that are likely to keep increasing at a rapid pace for decades to come. As we had mentionned, the portfolio had a 2.86% dividend yield with an average increase of 15% per year in the last 5 years.
The simplest way to look at this is this:
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Your original investment would generate over $40 per year 10 years from now and that does not even assume any price increase or dividend investment. It is virtually certain that these stocks will be priced higher 10 years from now and reinvesting dividends would also have a significant amount of impact on your performance. 25 years from now, those same very conservatives estimates would mean $325 per year in dividends and would certainly be well above $500 in passive income if you reinvested those dividends.
Buying Apple (AAPL) Stock Instead?
An alternative would also be to use that money to buy Apple’s stock instead of the latest iPhone. Numerous studies were done and they have stunning results. For example, if a buyer of a 1997 iPod for $299 had purchased Apple stock instead, that would be worth over $12,000 today!!!
The Real Question
“Does Having That New Shiny iPhone Instead Of Waiting 1 Year Really Outweigh Receiving Over $500 per year 25 years from now?”
You could certainly argue it both ways and if you prefer buying every new version of the iPhone I would certainly not argue the choice, but I think it’s worth considering what you are potentially giving up.
Thankfully for Apple (AAPL) shareholders, very few investors will end up resisting the temptation so the sales should once more show strong growth over the iPhone 4 sales.