"Skip the Coffee, Invest Instead" — Does It Actually Work?
We've all heard that advice — usually in a bank ad or a self-help book. But what do the numbers actually say?
What does a simulation of investing $5 every day in the S&P 500 price index from the start of 2015 through the end of 2024 show at the period end?
The Results
Why the Gap? Compound Returns
Compounding means earlier gains remain exposed to later price changes. With recurring contributions, however, every deposit spends a different amount of time in the market. You cannot apply the index's simple annual average to the full saving budget; every purchase must be calculated as separate units.
What If You'd Paused During the Crash?
- The effect of a pause depends on prices during the missed purchases and subsequent returns
- A fixed 12% or 15% penalty does not apply to every start date
- Continuing through the dip means you buy more units at lower prices — this pushes you ahead
$5 Not Enough?
A $10/day scenario doubles the contribution. With the same price path and execution rule, units and portfolio value are also roughly doubled; the percentage return does not change merely because the amount is larger.
What Does “Every Day” Mean?
The S&P 500 has no observation on weekends or market holidays. HowMuch?'s daily DCA simulation buys only on sessions with price data, so saving $5 every calendar day and buying $5 on every trading day do not produce the same contribution total. The article's $18,250 is a budget example of 3,650 calendar days × $5; the live calculator can show a different total based on trading sessions.
Price Index and Dividends
The S&P 500 price index does not include reinvested dividends. A real index fund can also differ because of expenses, tracking error, tax and distributions. The displayed range is therefore an illustration of method, not a promised outcome.
A Better Test
- Run daily, weekly and monthly frequencies separately
- Keep the total budget equal when comparing
- Distinguish price index from total return
- Review inflation-adjusted results separately
How Should You Use the Result?
This analysis is designed to make assumptions visible and reproducible, not to declare one universal winner. Change the amount, start date, currency and contribution frequency in the calculator to see how sensitive the outcome is. Review the worst window as carefully as the best one before making a decision.
A real investment can differ because of execution price, bid-ask spread, commission, tax, product expenses and the data provider's closing-time convention. The figures are therefore a gross historical comparison, not a personal return or a forecast.
