How Your Daily Tim Hortons or Starbucks Coffee Actually Costs You $200k
Five dollars a day is $1,825 a year. Put in monthly and left alone for 25 years at a 10% average annual return, $45,625 of contributions becomes $201,789. Roughly $156,000 of that final number was never contributed by anyone. It is return on return.
That is what the coffee actually costs. Not $5, and not the $45,625 you hand over across those years, but the $201,789 you would have been holding at the end of them. Ask people to guess that number before they see it and most say something closer to $80,000. Human intuition adds. Compounding multiplies. The gap between those two operations is where nearly all of the surprise lives.
A $5 coffee a day, three ways. Black line: spent, and gone. Grey dashed: kept as cash. Red: invested at 10% a year. Every figure on the chart is computed, not illustrative.
Figures current as of August 30, 2026.
What the chart assumes, stated plainly
Every one of these is an assumption, and the chart states them on its own face:
- $5.00 a day. This is a round number chosen for the model. It is not a measured average price of anything. More on that below.
- $1,825 a year, which is $5.00 multiplied by 365, contributed in equal monthly instalments of about $152.
- 10.0% a year, compounded monthly. This is the S&P 500’s long-run average annual total return with dividends reinvested since the index launched on March 4, 1957.
- 25 years, with nothing withdrawn.
- Before fees and before tax. Neither is modelled.
The 10% deserves a note. We computed the compound annual total return of the S&P 500 across the 69 calendar years from 1957 to 2025 from the annual return series in the NYU Stern historical returns dataset and got 10.59%. The chart uses a flat 10%, which is the more conservative round number. It is a historical average, not a forecast, and we say more below about what that average hides.
Why the number surprises people
The reason a projection like this feels wrong is structural, not arithmetic. Asked to extend a pattern, people extend it in a straight line. Compounding is a curve, and the curve is nearly flat for years before it turns.
Here is the same $5 a day at the same 10%, at five different finish lines. We computed these ourselves using the identical method in the chart script.
| Years | Contributed | Ending value | Growth | Growth as a share of the total |
|---|---|---|---|---|
| 10 | $18,250 | $31,154 | $12,904 | 41% |
| 20 | $36,500 | $115,487 | $78,987 | 68% |
| 25 | $45,625 | $201,789 | $156,164 | 77% |
| 30 | $54,750 | $343,783 | $289,033 | 84% |
| 40 | $73,000 | $961,787 | $888,787 | 92% |
Our own computation, $5 a day contributed monthly at 10% a year compounded monthly, before fees and tax.
Read the last column downward. At ten years, most of the balance is still your own money and the whole exercise looks unremarkable. At forty years, 92% of the balance is growth and your contributions are a rounding error inside your own account.
The shape shows up more sharply in a single comparison. Over the 25-year run in the chart, the final five years alone add $86,302 of value. That is more than the $45,625 contributed across the entire 25 years. The last stretch of a compounding curve does more work than every earlier stretch put together, which is precisely the part that cannot be recovered later.
The variable doing the heavy lifting is time
This is the part of the idea that actually matters, and it is not about the size of the contribution.
Take two people, both finishing at 65. One starts at 25 with $5 a day. The other starts at 45 and puts in four times as much, $20 a day.
| Starts at 25, $5 a day | Starts at 45, $20 a day | |
|---|---|---|
| Years invested | 40 | 20 |
| Total contributed | $73,000 | $146,000 |
| Value at 65 | $961,787 | $461,949 |
Our own computation, same method and same 10% assumption, before fees and tax.
The second person contributes exactly twice as much money and finishes with less than half as much. To match the first person’s $961,787 over 20 years instead of 40, they would need to contribute about $41.64 a day, which is $303,975 in total, more than four times the contributions of the person who simply began earlier.
The cost of waiting can be priced directly. Starting at 25 and running 40 years produces $961,787. Starting at 35 and running 30 years produces $343,783. The ten-year delay costs $618,005, and the contributions skipped during it total only $18,250. Every dollar not contributed in that first decade costs about $33.86 at the finish line.
We want to be careful about how that reads. It is not a scolding of anyone who did not start at 25, and it is not a reason for someone at 45 to conclude the exercise is pointless. Twenty years at $5 a day still turns $36,500 into $115,487. The point is narrower and more useful: when people ask what they need in order to start, they almost always name a dollar amount, and the arithmetic says the binding variable is the calendar.
What a smaller number does
Five dollars a day is not available to every household, so it is worth showing the arithmetic at a level that is closer to universal. Two dollars a day is $730 a year, about $61 a month.
| Years | Contributed at $2 a day | Ending value | Growth |
|---|---|---|---|
| 10 | $7,300 | $12,461 | $5,161 |
| 20 | $14,600 | $46,195 | $31,595 |
| 25 | $18,250 | $80,716 | $62,466 |
| 30 | $21,900 | $137,513 | $115,613 |
| 40 | $29,200 | $384,715 | $355,515 |
Our own computation, same method and same 10% assumption, before fees and tax.
The proportions do not change, because compounding does not care about the size of the deposit. At 25 years, 77% of the balance is growth at $2 a day, exactly as it is at $5 a day. Nothing about the mechanism requires a large contribution. That is the actual finding, and it is the opposite of the usual message that investing is something you get to do once you have money.
A practical footnote: at $61 a month, trading commissions and account minimums matter more than they do at $152 a month, and a route with a low per-trade cost, or one that lets you buy part of a share, matters correspondingly more. Fees are the one variable in this whole exercise that is both large and directly controllable. Our mutual fund fee calculator shows what a percentage point of annual cost does to a balance over the same kind of horizon, and it is not a small effect.
What this argument cannot do
An illustration that admits its limits is more useful than one that oversells, so here are the limits, without hedging.
It is not a plan for a budget with no slack. For a large number of Canadian households the constraint is income and housing cost, not discretionary spending, and no rearrangement of small purchases produces $152 a month that was not there. Telling someone in that position that their coffee is the problem is both wrong and insulting. The arithmetic above describes what happens to money that can be spared. It says nothing at all about how to spare it, and it is not an argument that everyone can.
It is not a claim that anyone who has not built wealth lacked discipline. The single most powerful variable in every table above is elapsed time, which is the one variable nobody can go back and change. That fact should make this genre less moralistic, not more.
10% is an average, and no year looks like it. Across the 69 years from 1957 to 2025, 15 of them, roughly one in five, produced a negative total return. The worst single year was 2008 at -36.55%. The worst ten-year stretch, 1999 through 2008, produced -1.36% a year annualized, meaning a full decade that ended below where it started. The best, 1989 through 1998, produced 19.05% a year. Someone whose 25 years happen to land badly gets a materially different number than the chart shows, and there is no version of this arithmetic that removes that risk.
Past returns are not a forecast, and the underlying index is American. The 10% comes from the S&P 500. A portfolio built around Canadian equities has a different return history, a different currency exposure and different tax treatment on dividends.
These are future dollars, not today’s dollars. The Bank of Canada targets 2% inflation, the midpoint of a 1% to 3% control range. If inflation runs at exactly the target, $201,789 in 25 years has about $122,997 of today’s purchasing power, and the 40-year figure of $961,787 is worth about $435,584. Still large. Not the headline number.
Because the return assumption carries so much of the result, here is the same 25 years of $5 a day across a range of assumptions:
| Annual return | Ending value on $45,625 contributed |
|---|---|
| 4% | $78,191 |
| 6% | $105,393 |
| 8% | $144,635 |
| 10% (the chart’s assumption) | $201,789 |
| 12% | $285,741 |
Our own computation. The 10% row is the chart’s assumption. The others are ours, shown to make the sensitivity visible.
Where the money sits changes the answer
The chart models no tax. In practice the account wrapper materially changes the outcome, and this is the one structural decision available to a small contributor that is worth as much as the contribution itself.
Inside a TFSA, growth and withdrawals are not taxed. The $156,164 of growth in the 25-year scenario stays whole. In a non-registered account, the same growth is taxable when it is realized, and the bill scales with the gain: at a 30% marginal rate on capital gains taxed at the standard 50% inclusion rate, tax on that $156,164 would come to roughly $23,425. That is an illustration using assumed rates, not a calculation of anyone’s actual liability, and the timing of realization changes it. The direction, though, is not in doubt.
The 2026 TFSA annual limit of $7,000 is nearly four times the $1,825 a year this article models, so the contribution room is not the constraint here. For money earmarked for retirement rather than general savings, an RRSP changes the arithmetic differently by deducting the contribution now and taxing the withdrawal later. For a first home, the FHSA does both, with a deduction going in and no tax coming out for a qualifying purchase.
On what goes inside the account, small regular amounts are the case where broad, low-cost funds do the most work, because they diversify a contribution too small to diversify on its own. We cover the options in our guide to Canadian ETFs and in the best ETFs for a TFSA in 2026. If the intention is to reinvest distributions, which is the mechanism the 10% total return assumption depends on, our dividend income calculator and our Canadian dividend stocks coverage are the relevant starting points.
About the coffee
We should be honest about the unit of measurement, since it is the part of this genre that is usually fudged.
The $5 is an assumption written into our chart script. It is not a measured average price for a cup of coffee anywhere in Canada, and we are not aware of an official Canadian statistic for the price of a cup of coffee bought at a counter. Statistics Canada does publish real retail prices for coffee as a grocery item: in June 2026, the Canada-wide average for roasted or ground coffee in a 340 gram package was $9.35, from Table 18-10-0245-01. Statistics Canada notes that this series is built from retailer transaction data and cautions that it should not be treated as a measure of pure price change over time.
If you buy your coffee at Tim Hortons, at Starbucks, at an independent shop or from a bag on your own counter, none of that changes anything above. We are not comparing their prices, we are not quoting a price as theirs, and we have no view on where anyone should buy coffee. The coffee is in this article for one reason: it is a quantity almost everyone can picture without doing arithmetic, which makes it a good unit for demonstrating something that is otherwise hard to feel.
And the demonstration is not “give this up.” It is that the entry price to investing is far lower than most people believe it to be, and that the thing which makes the number large is not the size of the deposit.
Frequently asked questions
Does $5 a day really become $201,789? It does under the stated assumptions: $1,825 a year contributed monthly, 10% a year compounded monthly, 25 years, nothing withdrawn, no fees and no tax. Change any one of those and the number changes. The 4% to 12% table above shows how much.
Where does the 10% come from? It is the S&P 500’s long-run average annual total return with dividends reinvested since the index launched in 1957. We computed 10.59% for the 69 calendar years from 1957 to 2025 from the NYU Stern annual return series, and the chart uses the more conservative flat 10%. It is a historical average and not a prediction.
Is a 10-year negative stretch really possible? Yes. The ten years from 1999 through 2008 produced -1.36% a year annualized on the same series. One year in five since 1957 has been negative. An average is made of years that do not look like the average.
Is it too late to start at 45? The arithmetic says late is worse than early and also that late is better than not. Twenty years of $5 a day at 10% is $115,487 on $36,500 contributed, with 68% of the balance being growth. What the arithmetic does not do is make up for the missing decades with a larger deposit, as the comparison table above shows.
What if I can only manage $2 a day? The proportions are identical. At 25 years, 77% of the ending balance is growth at $2 a day just as it is at $5 a day. The absolute number is smaller because the deposit is smaller, but the mechanism is not weaker.
Is $201,789 in today’s dollars? No. It is future dollars. At the Bank of Canada’s 2% inflation target, it is worth about $122,997 in today’s purchasing power.
Should I stop buying coffee? That is not a question this article can answer, and it is not the point of it. The point is that small regular amounts compound far more than intuition suggests, and that the biggest determinant of the result is how long the money is invested.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. CRA figures current as of August 30, 2026.
