Question: Did your family have a “spare change jug” while you were growing up?
Better Question: Do you have your own personal “spare change jug” now?
The joy of unloading a full spare change jug at the bank or into a CoinStar machine is perhaps one of the most underrated feelings in the world. Generally, it is a mystery as to how much the sum of your change is worth and, it seems that sum of change is often worth more than you initially expected. However, while it is great if you are saving your change, you are likely not using your change to its full potential.
As an investor, your goal is to determine the ways that your money can most effectively work for you and use the strategies you find to their full potential. Understandably, though, many young people are a bit slow to begin investing, often because they think that they do not have enough money to start. The good news is, they can consider starting with the change left in their pocket! No matter how large or how little the investment, everybody needs to start somewhere. Further, if you are already investing, something as simple as a change jug might be another tool to utilize in order to improve your investing and saving habits.
Think about your change jar. Common containers used to save change are items such as coffee cans, mason jars, and five-gallon water jugs. Logically speaking, the bigger the container, the longer it will take to fill; meaning that there will be a considerable amount of change sitting dormant in your house for a long period of time if you chose to use a five-gallon water jug. By thinking like an investor, you quickly see that dormant change is not good because it is not collecting interest or gaining value through time like a stock might. In fact, the change sitting dormant in your house might even be losing value over time due to inflation.
Let’s look at the Numbers:
If you had a five-gallon water jug with $10 worth of quarters in it, there would still be a very significant amount of space left in the jug to continue to collect change. If it were 2013 when you had that $10 worth of change and it took you until 2017 to fill the rest of the jug with only quarters, your full jug would be worth approximately $4,000 (estimating that a five-gallon jug can hold 16,000 quarters). Over the course of the four years from 2013 to 2017 you would have accumulated $3,990 worth of change with an annual return of $997.50. However, your change would have made no interest and had no growth in value during that time. In reality, the buying power of your change would lose value as the cumulative rate of inflation for the US Dollar rose between 2013 and 2017. In contrast, if you decided to invest the initial $10 in a stock, such as Facebook on August 17th, 2013, and held your position until August 17th, 2017, your investment would be worth $45.24 as Facebook grew 452% during that time. Even more amazing, if you chose to continually invest in Facebook as you collected change for those four years, you would have accumulated much more than the $4,000 that would otherwise be sitting dormant in your five-gallon water jug.
Clearly, Facebook is an extreme example, as it has grown so tremendously over the four years in question. However, by using it as an example, it is easy to see how investing a little change at a time can add up to big returns in the future. Getting in the habit of saving your spare change is always a great idea, but remember to consider frequently emptying your jug and investing it so you can realize financial growth. You might want to think twice the next time you find loose change in your pocket and decide to throw it in a jug!