(last updated Sept. 2020)
How Much Would $1 Invested in the Dow Index in 19xx be Worth Now? This post addresses that question for any two years. The calculator works whether your initial investment was $1, $100, $10,000, or any other amount. In addition, this calculator determines the average total yearly return (compound yearly growth rate) between the two years you input. Since total return includes reinvested dividends, it breaks out both the return attributable to dividends and the return resulting from price appreciation.
What If I Had Invested? -- The Observations Stock Market (Dow Index) Total Return Calculator
Just enter the starting and ending years, and starting investment amount. Optionally, you can enter an ending amount and find out what initial investment would have been needed to achieve that end result. You can use the arrows and sliders on the bottom of the calculator to scroll left and right. Enter data only in the gray cells. On some phones you may need to double click to enter data. On some computers, you may have to enter some fields more than once for it to "take." Please leave a comment if you are having problems.
$1 Invested in the Stock Market (Dow) in 1929
The graphic above shows the results of a hypothetical investment in the DJIA (Dow Jones Industrial Average Index) at year-end 1929. The assumption is that the investment was sold at year-end 2010, withall dividends reinvested in the interim. As always, these returns ignore the impact of taxes, commissions and any other expenses.
The row labeled "Investment" indicates that a $1 investment at the end of the "start year" (1929) would have grown to $1,189 by the end of the "end year" (2010). (Note: end-of-year 2019/ beginning of 2020 is the most recent data point.)
What was the Compound Annual Growth Rate of the Dow Index Between 1929 and 2010?
Still on the "Investment" row, under the "Annual Return" column, we see that the investment would have returned 9.1% per year. That is, $1 growing at 9.1%/year from 1929 to 2010 would become $1189. The "Closing Prices" row shows that of that 9.1%, about 4.9% came from the increase in the price of the Dow Index (it increased from 248.48 to 11577.51).The "Dividends" row shows that of the 9.1% in total return, about 4.3% came from dividends. In addition, we see that the dividend yield was 5.1% at the end of 1929, and it dropped to 2.5% by the end of 2010.
How Much Would You Have Needed to Invest to Have $100,000 at end of 2010?
The "Investment Needed" row reverses the calculation -- you input the amount you want to end with. In this case, I input $100,000, and the calculator determined that in order to have $100,000 at the end of 2010 you would have had to invest $84 in 1929.What If You Had Invested $1,000 Invested in the Stock Market 25 Years Ago -- What Would it be Worth Now?
If you were to change the start year to 1994 (25 years ago), and change the initial investment to $1,000, the spreadsheet would calculate an ending amount of $12,931.Remember, the spreadsheet contains price and dividend data for years from 1929 through 2019. Because they correspond to major market highs and lows, some popular choices for start/end years are 1932, 1974, 1981, 1999, 2002 and 2008. For example, you could ask:
What Would $1,000 Invested in 1974 be Worth in 1999?
Invest that $1,000 for the 25 years beginning year-end 1974, and you would have participated in a 25-year bull market. As a result, instead of ending with "only" $12,931, you would have ended with $47,814.Related Posts
If You Had Invested $1 in the Stock Market in 19xx (graph version): a "big picture" view of returns over the years.What Will a $10,000 Investment be Worth in 10 Years? summarizes the results from many previous 10-year periods to give you a broader perspective.
What Will a $100,000 Investment be Worth in 20 Years? summarizes the results from previous 20-year periods.
Why Investing in the Market for Less Than 5 Years is Risky summarizes the results from previous 5-year periods.
The Observations Inflation Calculator/Spreadsheet: Will calculate, for example, what that $84 in 1929 would be equivalent to in today's dollars.
For lists of other posts, by category, see the drop down list (mobile viewers) or tabs (computer viewers) just below the blog header at the top of the page. There are additional links in the sidebar if your device supports sidebars.
Copyright © 2020. Last modified: 9/24/2020
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This is very useful.
ReplyDeleteCould you comment on the question of survivor bias in the figures typically quoted for market returns since 19xx. One is always reminded that these index return figures don't include companies that went out of business and/or were de-listed.
I assume that you're using DJIA to avoid this.
Thanks.
I guess the easy answer is that if you want to see how much a dollar invested in the Dow would be worth, you have to measure the Dow. I don't have much choice. It is what it is.
DeleteSurvivor bias, however, is a serious issue in a lot of mutual fund studies because the studies ignore funds that no longer exist; those companies are not in the studies at all. The Dow history does include the old companies. They are just replaced at some point with new companies. Else, you could end up with a Dow consisting of companies in industries that no longer exist.
Excellent article. Profiting veery well from your advice 8+ years on. Thank you!!
ReplyDelete