Dollar Cost Averaging Into the S&P 500 Over 30-Year Periods (After Inflation)

August 30, 2012

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:

Dollar Cost Averaging $100 Per Month Into the S&P 500 Over 30 Years (Minus CPI)

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.

8 responses to Dollar Cost Averaging Into the S&P 500 Over 30-Year Periods (After Inflation)

  1. Very cool chart. Would you be willing to do a comparison chart with DCA yield vs. buy on day 1 yield? I’d like to see how big the DCA effect is, and in what time periods. Or alternately, if you’d mail be the sheet thus far I’d be glad to do it.

  2. No-one invests a fixed amount for 30 years.

    Now try it again, scaling the contributions based on median wages by age group! ^_^

  3. Nice study.

    1. Can you share the inflation rates over each 30 year period?
    2. Are reinvested dividends included in each 30 year return calculation? In other words, are your return figures “total return” figures, or are they based solely on price changes in the S&P 500?


  4. Bill,

    The returns are total returns, which include dividends, minus the CPI for that period. I got the CPI numbers from the BLS.


    Interesting idea. I’ll look into it.


    Yes, I can do that.

  5. Awesome Jeffrey ,
    That is exactly what I had in mind. The next step is to take it to the extraction phase where you retire at 65 and you remove an annual 3, 4 & 5 percent from the portfolio. Play that out and see how the income levels work out .

  6. Nice investigation.

  7. Very interesting. What would happen if you did it for 35 years instead? I’m guessing the highest period wouldn’t be as high compared to 30 years, however the lowest period wouldn’t be as low compared to 30 years either. Time in the market wins, if you have enough of it!

  8. Wow that is a lot of data! I’d love to see what fees do to those returns