## Thursday, November 10, 2011

### If You Had Invested \$1 in the Stock Market in 19xx (graph thru 2012)

Want to approximate what \$100 invested in the stock market in 1932 would be worth now? The graph below will help you estimate what \$100, \$1,000, \$10,000 or any other amount would be worth if invested in 1932, 1982, 2002 or any other year -- assuming dividends were reinvested.

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
over \$1,000. For the graph above, "now" is year-end 2012. The reading on the vertical axis can be used like a multiplier for any starting amount. Therefore, \$150 invested in 1928 would be worth over (\$150 x 1,000=) \$150,000. The actual multiplier for 1928 as calculated by the spreadsheet is 1233.

### 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 \$4609. 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 4609=) \$4,609,000.

### 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 1962, 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 \$922)

### 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 2012 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.
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Should it be bought in coin form or ingots?
What percentage of gold should someone own?
Where should it be held...at home..bank safety deposit...or out of the USA.
If out of the USA....where would you suggest?