Dressing Up Your Future

You know the brand names: Calvin Klein, Salvatore Ferragamo, Ralph Lauren, Donna Karan, Gucci, Tommy Bahama, Guess, Hugo Boss, Kenneth Cole, Saks Fifth Avenue, Van Cleef & Arpels, Yves Saint Laurent, to name just a few. This is just a sampling of the more recognizable names in fine apparel. Go to the stores or websites of Nordstrom's, Bloomingdale's, Saks Fifth Avenue, or some other high-end stores and you will find much longer lists of name labels, many of which are known mainly to the rich and famous.

Now here's a simple question. Would you rather be rich, or just pretend you are? If "just pretend" was your answer, or if you are rich already, there is no need to read further. This article is for those who do not yet have large bank accounts, but would like to. It is for those who -- someday -- want to have a net worth with lots of numbers between the dollar sign and the decimal point.

TRASH TO TREASURE

There are many places you can buy clothes, from small boutiques to huge conglomerates. These stores carry attire that ranges from trash to treasure. In addition, you won't find just the finery of one kind in one place; some nationally known midlevel department stores carry some of the same lines as the high-end clothiers. That said, could you walk down the street carrying a poke that reads "J.C. Penney" and have the same spring in your step as you would have carrying similar, perhaps identical, duds in a sack that reads "Saks"? Fifty years from now, when you are lounging on the deck of a schooner in the tropics instead of freezing somewhere else, will you even remember that you bought a good shirt at Sears lo these many years ago instead of a name brand at Nordstrom's?

I recently visited a local mall to do some comparison shopping for this article. Research aside, the trip proved to be an enlightening experience. First, I went to one of the high-end stores. I jotted down prices for various shirts, sweaters, and pants. I found a nice golf sweatshirt for just $87.50 (the non-golf line was more like $45 to $50), a variety of long-sleeved T-shirts in the $26 to $29 neighborhood, a nice dress shirt for $58, some great jeans for about $68, and casual slacks in the $60 to $100 range.

Then I asked a salesman to show me some of the attire most asked for by name and popular with the in-crowd. I got sticker shock, and how! The salesman obligingly showed me dress shirts at $110, flannel shirts at $98, a nice (but not super) sweater at $295, a long-sleeved T-shirt at $33 -- the only comparative bargain in what I was shown was a pair of jeans at $69.50.

Somewhat shaken, I then ventured up two floors and found a saleslady in the women's department. After I explained my mission to her -- since now I was in totally unfamiliar territory -- she most graciously showed me around her department. My experience in the men's department prepared me for what I found next. Prices for the same type of clothing -- nice tops, sweatshirts, and jeans -- were pretty close to what I had found in the men's department. Remarkably, even though there was obviously less material in each comparable piece of clothing, the ladies' garments seemed a couple of bucks higher in nearly every instance -- but most of the female readers out there had probably noticed that already.

THE OTHER END OF THE MALL

My next stop was a long-established, midlevel, nationally known department store at the other end of the mall. In the men's department there, I found many lines of nationally and internationally known, top-of-the-line dress shirts in the $20 to $36 range. The store brand, top-of-the-line dress shirts happened to be on sale that day for $16. Remember, this was the good stuff I was looking at, not the bargain-bin assortment. One of the most famous and respected lines of jeans in the world was selling for $35 for their most-sought-after style.

Admittedly, the range and variety of top-line togs in the ladies' department of the midlevel store did not compete with what was in the more expensive store, but the price difference was astounding. Instead of saving about 50%, as I found in the men's department, the differential in the ladies' department between the high- end store and the midlevel store ran closer to 60-70%. That said, though the garments were still nice, the differences were easier to discern with women's clothing than they were with men's.

WHAT DIFFERENCES

My point is this: The difference in quality did not match the difference in price. The vast majority of the price difference seemed to come, in every comparison, more from the label and the name on the bag in which it left the store than from any difference in quality or style.

The reason for all this comparison shopping was to see if I could help you outfit your financial future. I hope you will use the money saved by more judicious clothes-shopping to make a long-term impression on your retire-ment instead of a short-term impression on your peers. Your friends may question your actions now, but they will wish later that they had had the same strength and resolve.

Opting for new threads with less-prestigious labels could end up being very lucrative. If you went shopping on your 20th birthday and saved $33 on a pair of jeans, and a like amount each on a dress shirt and sweater, counting the taxes saved in most areas, you could have more than $100 left over from your careful spending to put into a retirement account.

COMPARISON SHOPPING. Here's what you could get if you went shopping at a mid-range store as opposed to a higher-end store. Not much of a difference there.

Then, if you took that $100 and put it in a tax-deferred sav-ings plan that earned a 10% rate of return, when you turned 70 you would have $10,672 to spend. You could use that extra $10,572 to pick up a pair of jeans, a dress shirt, and a sweater in person in Paris or Hong Kong -- and still be ahead. Even if you didn't save that $100 until your 50th birthday, you could still have an extra $612 at retirement. And if that's what happens if you save $100, imagine what you could have if you used your savings to fund your IRA for the full $2,000 limit.

As I said at the beginning, if you would rather pretend to be rich and struggle for the rest of your life to make ends meet, this information is not for you. However, if you would rather have an impressive bank account when you retire than a Saks sack today, give some serious thought to being a real fox in the future instead of a faux fox today.