Why not just bake a cake?

February 14, 2011

Penny Pryor
February 13, 2011

Oh look what day tomorrow is. That annual day that celebrates love and affection. How romantic. Have you bought your loved one some flowers? Will they be delivered to the office for maximum impact? Or perhaps you’ve planned an intimate dinner or getaway for two. How sweet … Now excuse me while I go and throw up.

No, I’m not going to tell you my relationship status. But what I am going to do is suggest how much better off you — or both of you — would be if you used that frivolous spending as part of a long-term investment plan. Or even put it away in your super.

I’m sure your better half will thank you when they’re older and able to enjoy a comfortable standard of living in their retirement.

It might be obvious by now that I’m not the most romantic of women but even the girliest girl, or most chivalrous gentleman, knows you can’t eat roses and they don’t last for very long.

Let’s say the average bunch of roses delivered costs about $100. If you put that in a savings account earning 6 per cent interest and added the $100 to it each year, you’d have $1500 at the end of 10 years.

Now the average annual return in Australian shares over the past 30 years is 14.9 per cent. So if you invested in Australian stocks, assuming they would generate a similar return over the next 10 years, you would more than double your money to over $2600.

Let’s say you spend $500 on Valentine’s Day each year. Our savings option above would see your original amount grow to more than $7600 and the Australian shares option would push your final sum out to $13,400. I know which option I’d prefer.

If you’re worried about the risks involved in ignoring Valentine’s Day — and there might be some — perhaps you could try a less expensive gesture like making a cake and delivering it in person.

Whatever you decide to do, it might be worth remembering that money still can’t buy you love.

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