So my faithful iPhone 7 is about goosed, so I kind of need another one(I dont like Android). There is zero chance that three chargers have stopped working at once, it must be the phone. Its done me a good service, I’ve replaced the battery twice but it is time for something new.
A similar spec upgrade for me is the standard 13 for 779.
I think it might be an interesting experiment, to purchase roughly the same in Apple shares, well in fact a little more. This on the view that the shares over time could appreciate enough to replace my mobile going forward when needed.
In the past 5 years, the Apple share price has increased 477% from $27 to $156. The 5 years before that it increased 93% from $14 to $27, 5 years before that 250% from $4 to $14, and finally 5 years before that 1000% from $0.36 to $4.
Past performance shows this stock keeps going up
On a worst case historic basis, to get a new iPhone every 5 years based on past performance, you need to have approximately 107% of the value of your phone in Apple shares for 5 years. If we factor inflation at 2.5% a year, then you needed to own 121% of the value of your chosen iPhone. Best case, well we can see the movement from 2001 to 2006, but I suspect that is unlikely to happen again.
So anyhow - thoughts? Could be an interesting experiment to fund ‘replacements’.
Worth a punt, and any other shares this could potentially work with?
Dougal old boy I myself had an iphone 7 for nearly 5-6 years and I switched to the iphone 12 pro max soon after release and am extremely pleased.
Its worth the upgrade but you shoould probably get the 13. It’s a better 12 essentially.
I do actually buy Iphones every 5 years. They can easily last that long. I had the 4, then the 7 and now the 12.
An easier strat is to just get a phone on a long instalments option or 0%, (Samsung has 2 year instalment plans on PayPal) or a low interest and pay for it with a tiny portion of dividends. Even 50£ a month wont dent your dividend income much.
Of course I would never do that and always reinvest.
Using accounting standards, did you amortized his value during it’s usable life?
Example:
Expected life: 5 years
Amortization value / %: value/number of years (expected) = absolute amount in GBP per year / xx.xx% per year
So each year, your asset will loose the calculated amortization value (accounting value), in the end, it will be 100% amortized and probably worth 0 in market value.
Practical case:
iPhone = 500 GBP
Life expected = 5 years
Amortization = 500 GBP/5 years = 100 GBP per year / 20% per year **
Year 1 = 500 - 100 = 400 GBP
Year 2 = 400 - 100 = 300 GBP
Year 3 = 300 - 100 = 200 GBP
Year 4 = 200 - 100 = 100 GBP
Year 5 = 100 - 100 = 0 GBP
** the amount of utility/satisfaction/income generation the iPhone must give you each year.
So according to the above calculations, you will need at least 100 GBP per year to be able to buy in the end of year 5, a new 500 GBP iPhone. (As smartphones are becoming more expensive each year if you buy high-end smartphones, you need to earn/save more than 100 GBP each year).
Maybe having interest/dividends/capital gains/savings will be a way of funding each year the needed funds to buy in the end of year 5, the smartphone you will need to buy. Or an investment that pays in the end of year 5, all the amount needed to buy the smartphone.
I assumed a 5 year lifespan, so effectively worthless at the end of year 5 and requiring replacement.
So if an iPhone cost 100% today, and taking 2.5% inflation, in 5 years time the replacement would cost 13% more than todays price(1.025^5).
Then in the worst performing 5 year period, the apple share price went up 93%. So to replace the mobile by the unrealised gain of your Apple shares at the end of that 5 year period, you need to buy 113%/93% or 121%. So if you bought an iPhone at £500, then you would need to buy £605 in Apple shares as well.
That number is actually flawed, as I’m accounting for inflation on the iPhone price, but not inflation on the shares. Effectively your shares would have 13% less buying power, so you need to buy 126% of the value of the iPhone in shares from the start.
I didn’t check your maths, so I will take them as correct. You must also include a cushion margin (conservative valuation, due to unforeseen events), meaning a need for higher capital gain in the Apple share.
You could reduce the capital gain needed, if you rise the number of shares bought.
I switched from iPhone 6s to iPhone 12 earlier this year. Insane difference. Don’t have to charge during the day anymore. I charge my iPhone 12 while sleeping and battery lasts all day while using it a lot.
