“Excuse me, sir, but could I get one of your finest Partridges in a Pear Tree, please?”
That’ll be $219.95. Up 4.7% since this time last year.
Apparently, we experienced a shortage of or a higher demand for pear trees according to this year’s PNC “Twelve Days of Christmas” Price Index.
If you’re like me, you’ve always found this “True Love” character in the “Twelve Days” Carol to be quite…eccentric. I mean really…nothing says “I love you” better than gifting 184 birds in twelve days!?!
Leaving the uniqueness of the gifts aside, I admire the effort and dedication that it took for Mr. True Love to save up for this elaborate display of affection (Note: being a financial planner, instead of seeing Mr. True Love as a privileged Trust Fund recipient, I like to assume that he diligently saved each and every month for the first ten years of marriage to surprise his lovely bride with a Christmas that she’ll never forget. Who doesn’t enjoy the story of a hard-working, save-first, hopeless romantic…am I right? I’m honestly surprised the Hallmark Channel hasn’t already obtained the movie rights!)
Anyhow, let’s look at how a newly married Mr. True Love saved up for his epic Christmas. If we assume he saved the same amount each month AND invested his savings in a low-cost S&P 500 index fund for the last ten years, here are Mr. True Love’s numbers:
- Monthly investment amount: $842.17
- Total investment over 10 years: $101,060.40
- Annualized return of S&P 500 index over last 10 years: 8.4%
- Investment account value after 10 years and total price tag of gifts: $157,588.00
- Number of gifts given over twelve days: 364
- Number of Significant Others who were so appreciative of the display of affection that they wrote a Christmas song that will be caroled every Christmas season for decades to come: 1
Moral of the story: it doesn’t matter what your goal is or even if it may seem a little different to others. If you break it down into manageable bite-size chunks and put the power of compound interest on your side, in only a matter of time, you too could be the lucky owner of 184 birds! 😉
With that said, here are the stories that caught my eye this week:
Christmas Price Index (PNC)
For more than 30 years, PNC has been calculating the prices of the twelve gifts from the classic carol “The Twelve Days of Christmas.” This year saw a slight increase in prices pushing the total for the “core” gifts (i.e. one partridge in a pear tree, two turtle doves, etc.) to $34,558.65. The total for all 364 gifts represented in the carol topped out at a whopping $157,558.00. The overall cost only saw a slight increase this year, but the increase was driven by the “cost increases for the Pear Tree, the increased demand for Golden Rings and wage increases for the Lords-a-Leaping.”
Mr. Index Worried About US Pensions? (Pension Pulse)
On a more serious note: when Jack Bogle (Mr. Index) talks, I listen…and when he says that he worries that U.S. pensions will not be able to meet their 7.5 to 8% return assumptions over the next decade, I take notice. This is particularly alarming considering that the Kentucky Teachers’ Retirement System Board currently uses a 7.5% assumption for their analysis, and just last month, requested a redo on the analysis of the proposed pension changes because it used a conservative 6% return assumption. The higher the assumption rate, the lower the amount that the State needs to budget for funding the pension plan each year. If Mr. Bogle is correct though and the state over-estimates its returns for a prolonged period of time, we could be having this same underfunding conversation 10-15 years down the road.
Acting House Speaker Osborne says pension reform agreement and bill drafting process ‘substantially complete’ (Kentucky Chamber of Commerce)
As expected, it sounds like a modified version of the Kentucky Pension Reform proposal could be released in the next week or two, based on this interview with the acting House Speaker. There’s no real indication as to what changes to the original bill would be made, but I suspect that the new bill would likely focus on changes to the most hotly debated issues and leave most of the meat and bones of the original reform bill still in place.