NYT: 30 years from now, that $1,000 iPhone will have cost you $17,000

From Brian X. Chen's "The True Cost of Upgrading Your Phone" in Thursday's New York Times:

Let’s talk about buying an iPhone for $1,000. Tim Cook, Apple’s chief executive, once compared this eye-popping price tag to buying a cup of coffee a day over a year. No big deal, right?

But financial advisers see this differently. By some estimates, an investment of $1,000 in a retirement account today would balloon to about $17,000 in 30 years.

In other words, $700 to $1,000 — the price range of modern smartphones — is a big purchase. Fewer than half of American adults have enough savings set aside to cover three months of emergency expenses, according to the Pew Research Center. Yet one in five people surveyed by the financial website WalletHubthought a new phone was worth going into debt for...

The irony of Mr. Cook’s coffee analogy isn’t lost on Suze Orman, the financial adviser who once famously equated people’s coffee habits to “peeing $1 million down the drain.” The seemingly small amount of money that people mindlessly spend on java — and now phone upgrades — could be a path to poverty, she said.

“Do you need a new one every single year?” asked Ms. Orman, who hosts the “Women and Money” podcast. “Absolutely not. It’s just a ridiculous waste of money.”

My take: What are we supposed to do for the next three decades, drink tea and use Androids?

21 Comments

  1. Daniel Epstein said:
    Probably should check their math! Rate of return on most investments would not give you 17k that quickly from 1k although I am sure it happens. For instance if you had invested 1k in Apple stock 30 years ago instead of buying something you would have more than 17k. Not the same result if you invested in GE. Also This idea would apply to Android and Apple phones equally. And would apply to a subscription to The NY Times as well. Not every purchase should be judged by whether the money used would be better as an investment. You want to be able to live and invest for the future so a balance is required.

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    October 21, 2021
    • Bart Yee said:
      Actually, for a 30 year time period, which is a long time and for many the extent of their work life, $1000 compounded annually at 10% (a nominal return for the stock market or S&P500 index fund, excluding dividends and any taxes) would yield ~$17,000 according to the compound interest rate calculator at investors dot gov. That also excludes any costs, fees, or additional contributions.

      Of course, if we move up an order of magnitude to $10K or $100K, we can see that adds up to real money, so don’t buy a car or a house either.

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      October 21, 2021
  2. Timothy Smith said:
    If I hadn’t bought iPhones, I wouldn’t have bought Apple stock. Nuff said.

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    October 21, 2021
  3. Jacob Feenstra said:
    It’s also good not to eat out anymore or eat at all. Don’t drive a car—walk. Don’t take a vacation. Live in a tent or under a bridge. No need for a Dyson. Just invest everything you earn and 30 years later you will be very wealthy. The argument of spending now being a cost to accumulative earnings counts for everything.

    The crux is, of course, to live a balanced financial life. Live (and give) today AND invest for the future. It’s not either or.

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    October 21, 2021
  4. Greg Lippert said:
    Duh. Yes if you save every penny you can get wealthy. Every purchase has an opportunity cost. Cherry picking phones is silly.

    Let’s see, how much would I save for retirement if I bought a used Ford Fiesta vs a new Mercedes? Hmm…

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    October 21, 2021
  5. Jerry Doyle said:
    I’m reminded what one of the Memphis Mafia members of the Elvis era entourage said to Elvis’ fans on his passing: “…. Don’t feel sad for Elvis dying at 42. He lived during his lifetime the full life of ten plus men.”

    Ok, one can save money by skipping the daily mug of Java and have a nice little nest-egg 25 years later. But what is life all about, if not living it fully?

    Elvis made millions and pretty much spent it all during his lifetime. He gave cars away and even bought his struggling music friends who drove beat-up old vehicles from gig-to-gig new touring buses to ensure their safe travel. He bought new homes and cars for friends (and even strangers) who had no home or who drove old cars. He bought millions of camera flash bulbs filling his swimming pool so that he and his Memphis mafia buddies could spend the evening with BB guns shooting the floating bulbs in the pool, only to spend the next week cleaning the pool to rid it of all the glass particles. When the King got a taste for his favorite peanut butter & banana sandwich, then he and his Memphis mafia friends would hop the “Lisa Marie” and fly from Memphis to Denver to his favorite shop that made those sandwiches for him to enjoy.

    When Elvis died, he had only one million in his checking account. Many would say that fact is sad. Others would say it was good timing, for Elvis used his fortune to enjoy his life fully while giving gifts to others to bring them joy. He could not have taken his fortune with him when he left.

    And so I own every colored Sport Band Apple has made for its Watch, I believe around 85 bands now. Some would say that’s ludicrous! But it brings smiles to my face and joy each morning as I select my Watch band color for the day. So, if I had not spent that $4,250 on Apple Watch bands what would I have done with those funds in savings? Look at my bank account? I prefer selecting my new colored band each morning. That’s living life fully. And buying a new iPhone “whenever you so desire,” is living life fully. 🙂

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    October 21, 2021
  6. Kenny Kruger said:
    Just another opinion Apple slap using arbitrary scenario. Expect this from NYT on a regular basis. Verizon paid for most of my last two phones BTW.

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    October 21, 2021
  7. Fred Stein said:
    So far off:
    1) 25% of the IB buy an Iphone each year. The ASP is about $800. That’s $200/year.
    2) Per NerdWallet, over the last 100 years, the S&P grew 10% annually (the CAGR to go from $1,000 to $17,000 in 30 years). AAPL has done much better over 30 years.
    3) SmartPhones save or make money or save time. Without a smart phone, people would buy mobile phones and cameras, etc. Just depositing checks with a smart phones saves dozens of trips each year. We’re more likely to redeem coupons and rewards on phones than with paper-based systems.

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    October 21, 2021
  8. Adam Stein said:
    How are you supposed to have a job without a smartphone (and I presume, a computer?) how are you supposed to invest your money in a retirement account ?

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    October 21, 2021
  9. David Emery said:
    Here’s a question: How much would you have if you invested the money for an NYT subscription into your IRA? Of course, an NYT subscription has zero trade-in value. 🙂

    (Someone with spreadsheet expertise can crunch those numbers in a couple minutes, figuring the annual cost of the NYT and a similar rate of return to what NYT proposes.)

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    October 21, 2021
    • David Emery said:
      p.s. And if you put that money from an NYT subscription into your IRA, you’ll probably be just as well informed at the end of the 30 years as you are right now 🙂

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      October 21, 2021
  10. Buy whole coffee beans only, on sale. Grind them myself, just before brewing. Runs about 50 cents a cup, including water & solar electricity used to brew/grind, not including my time.
    Trade-In my iPhone every 3 years. It is my mobile desktop in the car, at farmers markets and in the apiary. iPhone definitely contributes to my bottom-line as a technical writer. Siri/Dictation is now fantastic at complex terms: polycythemia hyperbilirubinemia, arteriosclerosis. I use Apple features to dictate 90% of everything I ‘write’ anywhere, all day long, including those medical terms. That’s why I am certain Apple’s new $4.99 Siri-only Apple Music plan will succeed.

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    October 21, 2021
    • Greg Lippert said:
      I do the same with my coffee and its much better than the overpriced coffee shops. That alone pays for my iPhone(s)

      2
      October 21, 2021
  11. Robert Stack said:
    Question: Does anyone take Brian Chen seriously?

    And this comment is from someone who still thinks a NYT subscription is worth paying for, even though I don’t necessarily
    agree with their take on everything…

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    October 21, 2021
  12. Kirk DeBernardi said:
    Sad are the writers who too often choose to write axe-to-grind articles.

    Weak premise anyway, as laid bare by all the above comments.

    “Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful… that’s what matters to me.”

    — Steve Jobs

    Must’ve been a slow news day, eh Mr. Chen?

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    October 21, 2021
  13. Robert Stack said:
    Susie Orman, the “financial advisor” who Brian Chen relies on may well be a celebrity, but she is considered shallow (at best) or a joke (at worst) by many more knowledgeable advisers. Consider this quote of hers in Chen’s article:

    “The truth of the matter is there’s nothing other than a medical expense worth going into debt for.”

    Really? No home mortgage either? As Bugs Bunny would say, “What a maroon!”

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    October 21, 2021
  14. Mordechai Beizer said:
    What a maroon (as Bugs Bunny used to say). By the same logic if you’re renting an apartment for $3,000/month you should complain that you’re being charged a rapacious rent equating to $51,000 at some point real soon now.

    Unconscionable!

    1
    October 21, 2021
    • David Emery said:
      I’m sure NYT would complain “the rents are too high” and wonder why -everyine in NYC can’t live in a rent-controlled apartment….-

      0
      October 21, 2021
  15. Robert Paul Leitao said:
    I remember an old saying from Accounts Receivable folks, “Please pay us so we can pay them so they can pay you.” So we should all bring our lunch to work every day, don’t bother with the “extravagant” cup of purchased coffee. Forget vacations, Broadway shows, baseball games, dinners out and don’t dare buy a new iPhone. Those are all wastes of hard earned money and will destroy retirement plans. I guess we should all be misers. So much for economic growth as employment falls and opportunities diminish. Is the NYT suggesting we should all wall off and sit at home counting the stash we don’t dare spend? There will be plenty of time for that because jobs would be scarce. Forget retirement. We’ll all be idle already.

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    October 21, 2021
  16. Ken Cheng said:
    Why is Brian Chen trying to give out financial advice, when he’s a tech columnist? Going beyond his remit, seems to only show he has some particular axe to grind against Apple products, since the same argument can be made about any purchase in life.

    Why buy diamond engagement rings for your betrothed? You could invest the money instead! You wouldn’t support that DeBeers monopoly or support awful underground mining conditions, and your future spouse will love you even more, or maybe not. Calculating the value, when he only looks at the potential cost side, without looking at the benefit side is amateurish.

    Every little and/or big item that we purchase can be used to illustrate the concept of compound growth rates. If, one were to follow thru with the thought experiment that we should invest these small daily sums of money, we’d end up with purchase paralysis. Maybe Brian wants to take over the financial advice column at the NYTs.

    1
    October 21, 2021

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