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I invested my spare money in a computer, and it's definitely paid back more than the S&P 500 in salary. Using up limited funds in childhood on financial investments is just madness
For me, the stocks would be ~$260K. Simple interest (7%) would be $207K
Hey 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…
http://finance.yahoo.com/q?s=%5ESP500TR
S&P 500 Total Return Index. Calculated intraday by S&P based on the price changes and reinvested dividends of SPX with a starting date of Jan 4, 1988.
Hey 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…
You may want to look at Robert Schiller's (of Case-Schiller index fame, among other things) data set available here: http://www.econ.yale.edu/~shiller/data.htm He has S&P dividends by quarter back to 1871.
Fees do make a difference, though they are pretty small in e.g. VFINX -> VFIAX. If you want to be super realistic you could build up the dollars a day at say the federal funds rate until you hit the VFINX minimum, then accumulate $100 batches at that rate before investing them in the S&P 500. Once the account hits VFIAX switch to that for fees. There's also taxes but that's just a mess because there are so many possible scenarios. Probably this whole paragraph is just overkill.
As for as inflation goes, the big thing is not the current amount of money, which after all is today's dollars and so easy to understand, but to try to get across the fact that in 1950 $1 was a heck of a lot more than it was today (about $10). Still not a huge amount of money perhaps, but not something you would just drop in a tip jar either.
That also gets to the point that is kind of a crazy investment strategy. In real terms you are investing the most when you are least able to afford to. Since it isn't supposed to be a serious strategy, instead more of something to think about that's no big deal, but it's worth noting.
Hey 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…
And I think it illustrates that it doesn't have to be a "lot" of money to make a big difference over time.
It's also rather misleading, as you point out, because you can't invest $1 (or often even $31 a month). I assume you have seen the mr. money mustache (MMM) web site. His approach to communicate the value was to discuss mutual funds which reflected broad diversity in the market. Many of them have quite long histories as well. Of course with mutual funds you have to factor in taxes (which is really hard to do in a general way) since funds transact sales and that results in the realizing of short and long term gains and losses.
Aside from the difficulty of actually investing $1 a month I found the visualizations excellent and the floating bubbles pretty cool too.
I 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.
I invested my spare money in a computer, and it's definitely paid back more than the S&P 500 in salary. Using up limited funds in childhood on financial investments is just madness
That said, investing a dollar a day on behalf of your child and tracking the progress of the account with them over time would be a cool way to teach them about money. You could even give them the option of instead of receiving some portion of an allowance, invest that as additional money into the account. There's all sorts of possibilities.
Hey 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…
RE: 1, this reinvests dividends: http://finance.yahoo.com/q?s=%5ESP500TR S&P 500 Total Return Index. Calculated intraday by S&P based on the price changes and reinvested dividends of SPX with a starting date of Jan 4, 1988.
This is only true if there were no fees associated with investing, which is ridiculous. If you went to a stock broker with a dollar per day, you would be very lucky to end up with $0.01 in equity that day.
You could just do it in lump sums twice a year or similar. Plus unmanaged funds like indexes have lower recurring fees than managed funds.