Earn $1 Million If You Quit Smoking

Physician's Money Digest, April 2006, Volume 13, Issue 4

If I told you that you could get $1 million to quitsmoking, would you? What if you made this offerto one of your patients? I remember when a groupof tobacco executives appeared before a US congressionalhearing, placed their left hand on the Bible,raised their right hand, and swore that tobacco productswere neither addictive nor harmful to your health.Both nonsmokers and smokers knew this was a big lie.

Unfortunately, many young people still believethat smoking cigarettes is cool, and it makes themfeel and look like adults—until they figure out thatpeople keep their distance because of bad breath andthey can no longer control the habit. I rememberonce in a quick mart, an individual toting an oxygentank came in to buy a carton of cigarettes. Tobaccoexecutives can believe what they want, but theirproducts are as addictive as any drug.

Tobacco Investing

As a physician, you understand all the health benefitsof not smoking and the capability of living a longerlife compared with a smoking lifestyle. But did youever give any thought to the financial costs associatedwith smoking? What if I told you that the difficult actof quitting the habit could make you a millionaire?Would that be enough incentive to stop smoking? Forsome, the addiction will be too strong and their willtoo weak. For others, the act of quitting smokingcould put you on the path of making your first million.

Cutting Expenses

Let's assume that you smoke two packs a day. Apack of cigarettes costs an average of $3.50 (and upto $6.00 in some areas). This adds up to about $213per month. If a 25-year-old quit smoking and beganinvesting this money in, say, the Vanguard TotalMarket Index Fund (VTSMX) and kept the programgoing to age 65, they could be a millionaire. For myassumption, I'm using a more conservative 9%return when the actual historical return for the broadUS market is closer to 10% to 11%.

The difficult task of quitting can also cut yourout-of-pocket expenses in other ways. When youbuy life insurance, your nonsmoker status will saveyou big bucks. For example, a $1-million 30-yearlevel-term policy for a 30-year-old smoker costsabout $3000 per year, while a nonsmoker wouldpay only about $900 per year. This $2100 differenceinvested in our Vanguard fund would produceanother $480,000 by age 65.

If you have avoided or beaten the habit, pleasepass this article along to a smoker that you careabout. You may just save their life and help thembecome a millionaire.

Stewart H.Welch III, CFP®, AEP, is the founder of the Welch Group,

LLC, which specializes in providing fee-only wealth management

services to affluent retirees and health care professionals throughout

the United States. He is the coauthor of J.K. Lasser's New Rules

for Estate and Tax Planning (John Wiley & Sons, Inc; 2001). He welcomes

questions or comments at 800-709-7100 or visit www.welchgroup.com.

This article was reprinted with permission from the Birmingham Post Herald. He

thanks his associate Kimberly Reynolds for her assistance with this article.