My Daughter's $4 Million Wedding
My daughter Rebekah called me two weeks ago to announce that she is engaged to be married to Brian. I am absolutely thrilled and happy for Rebekah and Brian.
And now for the wedding plans and a very interesting question - how much should Rebekah and Brian budget for the wedding? I sent Rebekah an email on my thoughts...
Rebekah, Gillian and I are so happy for you. Congratulations!It will be a great celebration and yes, they can have their cake and eat it too!Here is something to think about regarding the wedding budget. Assume you spend $30,000 for your wedding. The real cost of the wedding would be $4,000,000. Now don't call me crazy, but let me prove it. You are now 25 years old. If we gave you $30,000 to invest in the stock market and you were able to achieve 12% annual return on investment (tax free) until you were 60 years old, the investment would grow to $1,583,989. And if you achieved 15% annual return, the investment would be worth $3,995,266.
That's essentially your $4 million wedding. Imagine what kind of party you could have at 60, if you invested the $30,000 now! Gillian and I look forward to working with you and your Mom to help with the wedding plans and budget.
Love, Dad.
Pierre Cutler
Our 4-Hour Workweek &
The Sacramento Executive
Comments
Issues:
1. You did not account for inflation. That $4 million is not worth as much in 35 years as it is now.
2. 12% and 15% tax-free returns annualized for 35 years is an incredibly high return. I don't think it is realistic to use numbers above about 8% for this situation. If you think that they can get that kind of sustained return at an acceptable level of risk then you need to spell out how.
3. You can't always live for tomorrow. You should live a little for today too.
Posted by: AllAboutVoting | February 3, 2008 10:29 AM
All About Voting: Thanks for the comment. I anticipated someone would raise the question, "How can you get 12% return?" I hear this comment all the time in my preachings about the time value of money. Invariably, someone raises this concern - see my answer in the next post. I get far greater than 12% returns and so can anybody.
Pierre Cutler
Posted by: Pierre Cutler | February 3, 2008 12:02 PM