APPLE ’S I PODCONSUMINGSAV ING ORINVEST ING

MONEYMUS INGS

MARK UNDERDOWN , F INANC IAL COACH

SMALLACORNMONEY .COM

MONEYMUS INGS

1 CONSUMINGOn 23rd October 2001, Apple launched it’s first IPOD with a sale price of $399.

This bought you a 5GB hard drive, and the now famous scroll wheel, which was

much easier to navigate through the iPod’s playlist than competitors and

helped the Apple iPod become the most sought after MP3 player.

From a financial perspective, in 2014 that $399 would have disappeared long

ago and you would have been left with an iPod that is outdated, and more

than likely, no longer works..

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2SAVINGInstead of consuming that $399, it could have been set aside for a rainy day and placed

into a bank account.

You would have received interest, however not a great deal in recent times. Assuming a

reasonable 3% pa over the entire period since 2001, your savings would now be worth

approximately $588.

Whilst those savings would have barely kept pace with overall inflation over that period,

due to the combined forces of entrepreneurial innovation and competition, particularly

applicable to the technology sector, these funds could now purchase a superior product

than the original iPod.

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The saved funds could have purchased an iPhone, which according to

Robert Bryce in his excellent book smaller faster lighter denser cheaper:

‘It has 250,000 times the data-storage

capacity of the computer onboard the

Apollo 11 spaceship that went to the

moon in 1969.'

The decision to delay consumption has rewarded the careful saver with

the ability to consume a far superior product in 2014.

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3 INVESTINGA purchase of Apple Inc (AAPL) stock on 23rd October 2001 using your $399

would have purchased 22 shares at a price of $18.14 per share.

Since your purchase of shares in 2001, the stock price of Apple has increased

dramatically in reflection of it’s incredible growth in sales of not just iPods, but

Macbooks, iPhones, iPads, not to mention it’s huge sales volume generated

through it’s iTunes platform

It has increased to such an extent that there have been stock splits since your

original purchase.

.

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Your 22 shares would now be converted into 308 shares

(a 2/1 split in 2005, plus a further 7/1 in 2014)..

Now 308 shares at today’s share price of $112.98 (late 2014) would be worth $34,797, a

truly incredible increase in wealth.

Over that period you would also have received dividends amounting to $1,320.88, with

the dividends alone trebling your original investment of $399.

Disclaimer: I have not taken account of taxes in my figures however I have also not

taken account the benefits of dividend reinvestment which would have further

magnified returns.

Of course if you made the incorrect investment that $399 could also disappear.

"WHILST TH IS I S AN EXTREMEEXAMPLE , I HOPE I T HELPS YOUDEC IDE THAT WITH AT LEASTSOME OF YOUR EARN INGS , YOUSHOULD BECOME AN I NVESTOR I NAN ATTEMPT TO I NCREASE YOURFUTURE PROSPER I TY . "

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- - MARK UNDERDOWN

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