Can shopping make you rich?

[phildonnia]

I came across this article:

https://www.marketwatch.com/story/how-to-shop-your-way-to-a-400-000-retirement-11603720700

Apparently, it's a new product that essentially puts credit card purchase bonuses into an IRA.  Fine, if you're going to get a bonus, that seems like a legitimate place to put it.  But then it gets silly:

The IRARewards venture may not sound like much, but it adds up. Contribute $6,000 a year to an IRA for 30 years, earn an average of 5% a year on your investments, and you’ll retire with $400,000 in your account.

Assuming that you are getting 10% bonus (the bonuses range from 1% to 15%, depending on the vendor), you would need to buy $60,000 in crap every year for 30 years to make this happen.  Whatever your finances, I don't think you can spend $1.8M on shoes and smartphones over 30 years, and then expect $400k to support your lifestyle in retirement.

But the article has quotes of approval from random financial advisors, who point out that you need to be careful not to go over the limit, or to exceed your earned income.  But other than that,

“That sounds awesome, especially for people who are in their spending years..."

A brief mustachian sentiment is buried near the end:

The churlish might point out that you can get 100% cashback on money you spend by…er…not spending it.

[YttriumNitrate]

Haven't people been doing that for years? The Fidelity® Rewards Visa Signature® Card can be linked to put 2% back into a:
    Brokerage account,
    Fidelity® Cash Management Account,
    Fidelity®-managed 529 College Savings plan,
    Retirement account,
    Fidelity Go® account,
    Fidelity Charitable® Giving Account®, or
    Fidelity HSA®
https://www.fidelity.com/cash-management/visa-signature-card

Of course, the trick with these is to make sure the spending is reimbursed business spending.

[socaso]

I read this yesterday and went to their website for more info. You link your credit and debit cards to their system and the bonuses go in once a quarter. I would like it better if they had more businesses I shop at regularly. Some places, like Safeway, were listed as having the bonus on website orders so it didn't seem you could get them in the store. My experience with Safeway online vs in the store is that the online prices are inflated and I get a better deal in the store. So I don't think this would get me very much but it might be good for someone who owned a business if there were enough vendors they used on a regular basis. Most of what I was seeing were chain restaurants and big name consumer shops.

[anonymouscow]

It seems like the same concept of the other dozens of “shopping portals” out there such as https://www.mrrebates.com/ (not an endorsement), credit card companies all seem to have their own portals where you receive cash back.

I have never used any, mostly because it looks I don’t shop at most of the stores they have deals with. The link I listed has Lowe’s and Home Depot 1%, Walgreens 3% which I don’t do enough shopping at to probably make it worthwhile.

A potential negative with depositing the money into an IRA directly, is unless you are depositing additional money into the IRA it might not be worthwhile to be investing tens of dollars into the stock market, and if you take the trouble to move the money to a different IRA, you might as well just use a different cash back portal and not have to worry about transferring money around.

A potential benefit is “forced savings”, but I might argue people jumping through hoops to save an extra 1% might already be good at saving money.

So unless their system has has some benefits over other portals (more stores, higher rebates, easier to use) just the fact that it goes into an IRA would be a negative for me, I would have another account open and would probably transfer the $20.00 I made out at the end of the year.

[phildonnia]

A potential benefit is “forced savings”, but I might argue people jumping through hoops to save an extra 1% might already be good at saving money.

I would argue that people who make purchases in order to get bonuses are very bad at saving money.