Buy the coffee...................

 

It's the cliche that refuses to die: Personal finance nag Suze Orman warned investors that if they "waste money on coffee, it's like peeing $1 million down the drain.

     I disagree.  If the difference between success and failure is the cost of a cup of coffee, you have much bigger financial problems.  A daily $5 latte does not amount to much in the grand scheme of life. . . .

     Here is what really gets me annoyed: Orman tells her audience that "Your Daily Coffee Habit is Costing You $1 Million," with this calculation:   Let's say you spent around $100 on coffee each month.  If you were to put that $100 into a Roth IRA instead, after 40 years the money would have grown to around $1 million with a 12% rate of return.

     Nope.  This calculation is nonsense, and worse, it is intellectually dishonest.  The actual real numbers are almost 75% less. . . . So, 12% annual returns for 40 years?  That's 50% better than the markets give you.  I literally have $5 billion for anyone who can get my clients fat 12% returns annually for the next 40 years.

-Barry Ritholtz,  How Not To Invest: The Ideas, Numbers, and Behaviors That Destroy Wealth—And How To Avoid Them