Is inflation included? Surprising to see such an important detail absent from the explanation of how returns are calculated.
It is not. Neither transaction costs.
If you invested $1 a day, starting when you were born
31–40 of 99 posts
Re: If you invested $1 a day, starting when you were born
#32A variant is start with one penny a day and increase by one penny each day. People are adults by 10,000 days, middle age by 20,000 and die around 30,000. The accumulated amount is triangle numbers of days, or the day count squared, then halved. That would be a half million (10K^2/200), 2 million and 4.5 million dollars respectively for these 10K-round numbers. These are actually feasible investment amounts.
Re: If you invested $1 a day, starting when you were born
#33Hey guys... I made the page. Just saw lots of traffic coming from here so figured I'd come check it out. A couple things I figured I should address after reading the comments: 1) Yahoo!'s historic S&P 500 data does not factor in dividends. So the returns would likely be 1-2% higher each year (which over time makes a very big difference). I should probably add a note on the page mentioning this. Here was my conundrum…
Regarding inflation, you can use the the CPI (http://www.bls.gov/cpi/), specifically the CPI-U (all urban consumers), not seasonally adjusted. For example, $1 in 2015 was $0.10 in 1950. The BLS actually has a little calculator you can play with (http://data.bls.gov/cgi-bin/cpicalc.pl).
It's fairly straightforward, but if you want a script to start you off, here's a little something I wrote in perl for my own fun: https://github.com/Amorymeltzer/sandbox/blob/master/inflatio...
Re: If you invested $1 a day, starting when you were born
#34I was kind of expecting it to be more. Not that I'd complain about an extra $114k right now. But after 40+ years I was thinking it would be more.
$1 per day isn't much money as far as initial investments go. They are also using the S&P 500 which by it's nature is mostly mature companies that aren't typically going to see explosive price doubling growth.
The S&P 500 is also a much safer hands-off investment which is likely to beat most active investors - especially for the amounts of investment we're talking about for $1/day (or even $10-100/day...)
http://www.npr.org/sections/money/2016/03/04/469247400/episo...
Re: If you invested $1 a day, starting when you were born
#35Too bad I had a lot of trouble making money as an infant.
You must have had a bad work ethic! Lazy baby, work harder.
Re: If you invested $1 a day, starting when you were born
#36I figured the high interest early 1980s would have made me more money. From April 1969 to today only $146,000 pfft.
Re: If you invested $1 a day, starting when you were born
#37Hey guys... I made the page. Just saw lots of traffic coming from here so figured I'd come check it out. A couple things I figured I should address after reading the comments: 1) Yahoo!'s historic S&P 500 data does not factor in dividends. So the returns would likely be 1-2% higher each year (which over time makes a very big difference). I should probably add a note on the page mentioning this. Here was my conundrum…
On inflation - it might muddle the calculation. Unless you're saying "Invested the equivalent of today's dollar"
I believe that CRSP [0] has historical indices that do include dividends.
Re: If you invested $1 a day, starting when you were born
#38Interesting, but I doubt people tend to invest this consistently and regularly. They probably have an easy time investing when times are good (and they actually have a few extra bucks to gamble with), and tend to not invest when times are bad (they're trying to eat). Take someone who was doing pretty good during the tech and real estate bubbles, and decided to invest their spare change in 1998, 1999, 2005 and 2006, b…
You're wrong. If you only invested lump sums in the S&P 500 in 1998, 1999, 2005, and 2006, you'd have made money by today. Not as much as you would have historically, but still a fair chunk - and while yes, inflation would have eaten a large, large portion of it, it's way better than leaving your cash under your mattress.
There's no way you lost money if you were in the S&P 500, unless you were pulling it out of investments after crashes - in which case, duh, you're buying high and selling low, what did you expect?
And that's if you were only in the S&P 500... a more reasonable retirement portfolio is much more diversified, which would have increased your returns and lowered your volatility.
Re: If you invested $1 a day, starting when you were born
#39If you invested $1 in the market for that many years you'd be broke because of how many fees you'd have to pay for each $1 trade. It would make more sense to calculate it as $365 per year since your birth, then at least your fees would be minimal.
Re: If you invested $1 a day, starting when you were born
#40This was presumably the rationale behind the UK's "Child Trust Fund" scheme: http://www.moneysavingexpert.com/savings/child-trust-fund-vo... which included a £250+ freebie to kick it off. However, none of the beneficiaries have matured yet.