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Specialized Tools
Latte Factor Calculator
Visualize how small daily expenses compound into surprising wealth when invested over 10, 20, or 30 years.
The Latte Factor, popularized by financial author David Bach, illustrates how small daily discretionary expenses — a coffee, a lunch out, a streaming subscription — translate into significant investment opportunities when redirected into compound-growth investments. This calculator shows the nominal growth (what you'd accumulate) and the inflation-adjusted real value, so you can see exactly what that daily habit is costing you in future wealth. Try different amounts and time horizons to find your personal "latte factor."
☕ Daily Expense
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Enter a daily expense amount to see its 30-year investment opportunity cost.
Frequently Asked Questions
The latte factor is a metaphor, not literal coffee advice. The real insight is about automating small regular investments — whether it's $5 or $500/month. The choice of what expense to cut is personal; the math works the same way. The key principle: automate regular investments early, let compounding work, and don't interrupt it.
Automate into low-cost index funds (Vanguard, Fidelity zero-fee funds). For tax efficiency in the US: max 401k first (especially if employer matches), then Roth IRA ($7,000 limit 2025), then taxable brokerage. Set up automatic monthly transfers so you never have to manually decide to invest. "Pay yourself first."
At 7% return, $150/month invested over 30 years grows to ~$183,000 — even though you only put in $54,000. The other $129,000 came from compound growth. This demonstrates why time horizon is the most powerful variable in investing — not the return rate, and not the initial amount. Starting 10 years earlier can double your final balance.