Let the tooth fairy pay for your dentures…
For those of you that read the post about our tooth fairy failure, you’ll be pleased to hear that I’ve accepted full responsibility, have done a log of begging on my knees, and my gracious wife has now forgiven me for mis-assigning blame.
But talking about the tooth fairy got me wondering about what the tooth fairy coins could fund later in life if invested.
So what are our key assumptions:
- 20 baby teeth per child (source: Colgate)
- Teeth fall out at 6 years old (source: my daughter and her friends)
- Average payout of $4.13 per tooth (source: Original Tooth Fairy Poll for 2017, sponsored by Delta Dental)
- Amount invested – $82.60 ($4.13 x 20, source: my calculator)
- Age that funds are spent – 66 years old – let’s leave the funds invested for 60 years
- Investment return – 6.4% per annum adjusted for inflation based on the S&P 500 returns over the last 60 years, giving a total return of 4,049% (https://dqydj.com/sp-500-return-calculator/)
So, after 60 years, the tooth fairy funds have grown to $3,344 (in today’s dollars). So, if your kid can delay their gratification and invest their tooth fairy funds, what could they buy in 60 years?
How about some dentures? According to the Heathcare Blue Book, a set of complete dentures would cost about $1,300 – so turns out the tooth fairy can actually pay for your dentures – and those of your significant other. I’m sure you could also spend a little more to upgrade those bad boys.
Alternatively, you could provide tooth fairy funds for about 40 grandkids.
Now let’s make things a little more interesting. Let’s say our fictional kid invested $82.60 every year from the age of 6 to 66. How much would this have cost her, and what would her investment be worth. Well, the total contributions would have been nearly $5,000, but her total investment would be worth $50,000.
Let’s go one step further. Let’s invest the $82.60 every month rather than every year. What then. Total contributions this time are nearly $60,000, but the total investment is now worth $646,000 (in TODAY’s money).
So why waste time looking at this? Well, compound interest is phenomenal. Or to quote some guy called Einstein, its “the most powerful force in the universe”. No disagreement from me, and I know a thing or two about ‘the force’…
Vader signing off.
