NOTE: I’m having a terrible time coming up with titles for these posts!
You asked for it (well, one person asked for it), you got it!
Here is a PDF I put together that looked at a hypothetical $100 per month investment into the S&P 500 Index over 30-year periods. The results are pretty interesting (and pretty sad, too). If anything, this information should tell you one thing: YOU NEED TO SAVE MORE MONEY! Granted, $100 per month is not a lot of money. My wife and I are saving a lot more than that. Of course, we’re both in our 40s now so we need to be saving a lot.
Here is the chart from the 5-page PDF report:
Over all 680 rolling 30-year periods, the average ending account value was $143,638 (a personal rate of return of 8.06%). The highest 30-year period was from January 1970 – December 1999, when the ending value was $271,535 (a personal rate of return of 11.35%).
The lowest 30-year period was from August 1952 – July 1982. The ending account value was $44,808 and the personal rate of return was 1.42%. Ouch!
One other intersting thing to look at is the difference one month makes. The biggest positive change from one month to the next was (March 1970 – February 2000) to (April 1970 – March 2000). Waiting that one month from March 1970 to April 1970 meant a difference $21,338. To the other extreme was (August 1968 – July 1998) to (September 1968 – August 1998). Waiting that one month meant a $32,642 drop in account value. This just shows you how returns affect large portfolios.