The Chanel sneaker case study

In a recent poll on my @sandrakstewart Instagram stories; 80 percent of my fashion loving following voted “BUY” over “Don’t be ridiculous!” for a pair of Chanel sneakers that cost an average retail price of approximately $1350 AUD!!

At this price these fashionable sneakers are definitely a splurge for most. ⁣

Despite being on the lower end of Chanel’s retail pricing (and before their recent price increase of apx 22%) the long term effects of short term purchases can be interesting to investigate! ⁣

So let’s run the numbers and the “opportunity cost” of spending vs investing... ⁣

Scenario 1 SPEND- the sneaky sneakers 👟 ⁣

I buy the shoes, I happily part ways with my $1350 and wear a cool pair of kicks and stunt on the gram for a month. I go running 🏃‍♀️ the shoes inevitably get dirty, worn out - go out of fashion.... I could perhaps even get them professionally treated & repaired for an additional cost at a designer shoe repair store. ⁣

Next year comes around and I treat myself to another pair of designer shoes and they cycle continues. ⁣

Ten years later I’ll most likely have old shoes and no accumulation of anything of value.. perhaps only my fleeting joy! ⁣

Although I’m down - $13,500..... ⁣

Scenario 2 SAVE & INVEST (small wins!) ⁣

I practice restraint, invest the $1350 into diversified index fund and use my favourite black on black Nike’s.. yeah the shoes were cute but I’m now over it! I repeat this series of good decisions over the next 10 years... ⁣

I now have $13,500 in my pocket... ⁣

but it doesn’t end there; there is also an.... ⁣

Opportunity cost!! - over ten years the capital appreciation would have gone up on each stock holding! That’s extra money there, the stock would have paid out aprox -20 dividend pay outs, that’s money there! ⁣

If we assume an easy to calculate conservative return of 5 percent per year the extra “free money” I would receive would be $4,329⁣

Making my total $19,179⁣

Now to take this further; if I continued this pattern until retirement over a total of 35 years ($1350 invested per annum) assuming 5% return (lower than average) you would have;⁣

Saved $47,250 ⁣

Gained $ 80,779⁣

Totalling $129,379 ⁣

Just from those; sneaky 👟 sneakers!!

#chanelsneakers #returns

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