How Much Would $1 Invested in the Stock Market in 19xx be Worth Now contains a spreadsheet to make these calculations precisely -- along with several related computations (e.g. calculating the compound annual growth rate). However, you need Excel or some other spreadsheet software on your computer in order to use that spreadsheet. This post will help readers who do not have the necessary software approximate the results of the spreadsheet.
What If You Had Invested $1 in 19xx?
The graph above (click to expand) shows that, for example, $1 invested at year-end 1928 is "now" worth a little over $1,000. The reading on the vertical axis can be used like a multiplier for any starting amount. Therefore, $150 invested in 1928 would be worth ($150 x 1,000=) $150,000. Note that the actual multiplier for 1928 as calculated by the spreadsheet is 1120, so our reading of the graph is in the ballpark.
What Would $1,000 Invested in 1932 be Worth Now?
Not surprisingly, the graph peaks in 1932 -- when the market bottomed after the crash of 1929. That peak, as calculated by the spreadsheet, is at $4186. If you guessed higher, you probably didn't notice that the vertical axis is log based. (If you're not familiar with graphs such as this, see About Log Graphs.) That means, for example, that $1,000 invested at year-end 1932 would now be worth about ($1,000 x 4186=) $4,186,000.How Much Would I Have Needed to Invest 25 or 50 Years Ago to Have $100,000 Now?
Since the graph gives you the multipliers, you can also do the calculations in reverse. The multiplier for 1961, 50 years ago, is about 100. To estimate how much you would have needed to invest then, divide $100,000 by 100; you would have needed to invest ($100,000 / 100=) $1,000. (The spreadsheet calculates $1099)Calculations Ignore Expenses
The graph and discussions above assume all money was invested in the DJIA (Dow Jones Industrial Average) at year-end, and sold at year-end 2011 with all dividends reinvested in the interim. As always, these results are theoretical and ignore the impact of real world expenses on reported market returns.Related Posts
How much would $1 invested in the stock market in 19xx be worth now? the more accurate, spreadsheet, version of this post.Real World Expenses Reduce Published Market Returns: the impact of expenses on returns.
Comparing Housing & Stock Market Growth: includes another view of cumulative stock market total return (i.e., including dividends) over time.
For lists of other popular posts and an index of stock market posts, by subject area, see the sidebar to the left or the blog header at the top of the page. Copyright © 2011 Last modified: 1/19/2012
Share This Article
Bookmark this on Delicious To share via Facebook, Twitter, etc., see below. Archives: thru 2010
0 comments:
Post a Comment
No spam, please! Comment spam will not be published.