Author Topic: S&P has returned 3.242% annually since I started working w dividends reinvested  (Read 6601 times)

Baylor3217

  • Bristles
  • ***
  • Posts: 291
I basically started working in the late 90s. With dividends reinvested the S&P has returned 3.242% annually.

Sheesh. That has really slowed down my plans. :)

Here's to a better next few years.
« Last Edit: November 26, 2013, 10:21:14 PM by Baylor3217 »

Honest Abe

  • Bristles
  • ***
  • Posts: 379
  • Emancipate Yourself from Mental Slavery
I've seen many articles referring to the 2000-2009 period as "the lost decade." Not much I can say other than good for you for sticking with it, and hopefully this coming decade will make the wait worthwhile!

brewer12345

  • Handlebar Stache
  • *****
  • Posts: 1381
I opened my first brokerage account in 1999.  The intervening years certainly taught me to avoid landmines and have a strong stomach.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1237
I started my professional career in 2000, in Silicon Valley. Although I've been a committed saver and can't really complain about what I've accumulated (and I know I was lucky to sell investments to make the down payment on a house in the spring of 2008), I do feel a bit sad when I imagine where things would stand if the historically normal 3x rate of return had applied during that time.

plantingourpennies

  • Bristles
  • ***
  • Posts: 443
  • None.
    • Money, Kittens, Happiness
Here is the calculator you can play around with-

http://www.moneychimp.com/features/market_cagr.htm

It does inflation adjusted numbers as well!

Best,
Mr. PoP

CanuckExpat

  • Magnum Stache
  • ******
  • Posts: 2994
  • Age: 41
  • Location: North Carolina
    • Freedom35
And if you had stayed committed to a certain fixed-income/equities asset allocation and rebalanced regularly during that time, where you have been?

I've always been 60/40 stocks/bonds and rebalanced; it's conservative, but works for me, and returns have been good. (Though I missed most of the "lost decade" :)

2527

  • Bristles
  • ***
  • Posts: 483
IF I remember correctly, the worst year in the stock market was 1933, and the best year was 1934.  In the long run, it's not the dollar value of your investments on any given day, it is the number of shares owned.  I hope you have had a chance to buy low and over the next 20-40 years it will pay off. 

chasesfish

  • Magnum Stache
  • ******
  • Posts: 4374
  • Age: 41
  • Location: Florida
When was your cutoff month?  The market is up high teens this year, I've seen those numbers before and they worked through this spring.  Remember that the market was selling for around 27x earnings at the peak.

I had a similar analysis a few years back, started working in '03 and in '09 the accounts were worth less than I had deposited.  Fortunately my savings ramped up big time due to some pay bumps in '09, '10, '11 and I've watched my stash grow 4x since then.

Its tough to give up on the market, stocks and properly maintained/maintenenced income producing real estate are the only things that beat inflation over 20+ year periods.

mcneally

  • Bristles
  • ***
  • Posts: 263
I suspect you're looking at lump sum X invested in the late 90s rather than Y% of salary invested each year since then, which would have a higher return.

Honest Abe

  • Bristles
  • ***
  • Posts: 379
  • Emancipate Yourself from Mental Slavery
I suspect you're looking at lump sum X invested in the late 90s rather than Y% of salary invested each year since then, which would have a higher return.

That's what I was thinking since we're up over 100% since the bottom of the recession

Hamster

  • Pencil Stache
  • ****
  • Posts: 623
I suspect you're looking at lump sum X invested in the late 90s rather than Y% of salary invested each year since then, which would have a higher return.
This!

I assume you didn't deposit all of your investments as a lump some on the first day of work? If you were contributing an equal amount monthly for the last 15+ years (i.e. dollar cost averaging), then your return would be much better than a hypothetical lump sum deposit in 1998.

This calculator says that if you'd invested $100 per month in an S&P index starting in Jan 1998, then you'd have contributed a total of ~$19000 over the last 15+ years, and would have ~$29,000 now (minus fees). I don't think this includes reinvested dividends and don't know how to calculate your annualized return since that money was contributed evenly over nearly years, not as a lump sum... I'm sure there are better tools out there... Anyone?

Using very crude back of napkin math, I'd estimate the return on the above investment would be a bit over 5% avg annualized, but I'd love for someone to correct me.

Bigote

  • Bristles
  • ***
  • Posts: 277
I started working in 1990 and stopped 23 years later.  The market returned 8.55% annualized in that time.  (Nominal). 

C. K.

  • Bristles
  • ***
  • Posts: 400
Here is the calculator you can play around with-

http://www.moneychimp.com/features/market_cagr.htm

It does inflation adjusted numbers as well!

Best,
Mr. PoP
Thanks

golden1

  • Handlebar Stache
  • *****
  • Posts: 1541
  • Location: MA
This is one of my biggest worries about using stock market investing as the primary basis for FIRE.    Most people base future projections on past market behavior, but I really don't know how much sense that makes.  The market now is a very different animal than it was in the 20th century.  I don't anyone can really predict what is going to happen.  I worry about several decades of stagnation like Japan, or a complete market collapse like we almost had in 2008.  So I diversify, even if that means I may be missing out on the possible max returns I could be getting.  I'd rather hedge my bets so that is something goes south, I have another iron in the fire. 


rocketman48097

  • Stubble
  • **
  • Posts: 200
I graduated in 1999 and started investing right away.  I have been through the first crash as well as 2002, and the most recent lengthy one in 2009.  I suppose since I was able to put so little away when I first graduated that this was no big deal to me, and as the market crashes kept coming, I kept working and put more and more away.  With the recent rallies, up 30% this year for example, I am not sure why this is a big conern.

If, and only if, the market is in a sharp decline when you are near retirement, simply work a few more years until it recovers, then quit.  Cut back your spending in the meantime so you can save more.  I have never met one person in my life who couldn't cut back their spending somewhere, usually in significant ways.  Monthly recurring bills are the worst, because people pay these things without analyzing them. 

mpbaker22

  • Handlebar Stache
  • *****
  • Posts: 1095
I started working January 6, 2012 and I have 23% annualized returns since then :P

Dezrah

  • Bristles
  • ***
  • Posts: 457
Does anyone else do this sort of thing?  I like to check my investments everyday using Mint.  If they're up, I say "hooray, my net worth is improving."  If they're down, I say "hooray, I'm going to buy some stocks for cheaper when my automated plan goes through."  Either way I feel like a winner.

El Gringo

  • Bristles
  • ***
  • Posts: 314
  • Location: Washington, DC
Does anyone else do this sort of thing?  I like to check my investments everyday using Mint.  If they're up, I say "hooray, my net worth is improving."  If they're down, I say "hooray, I'm going to buy some stocks for cheaper when my automated plan goes through."  Either way I feel like a winner.

Me too! Except I find Mint to be really crappy when it comes to analyzing my investments (but I prefer it for budgeting). I check my investments on Personal Capital or SigFig.