Dear Friends, If you are a young investor or if you trying to help a young investor, I think you will find the following calculator helpful. The calculator was created by Nick Maggiulli, C.E.O for Ritholtz Wealth Management. He runs a wonderful website for data driven investors. His Dollars and Data website is a perfect companion to fellow Rithhotz educator Ben Carlson. |
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Nick used data from Robert Shiller’s website that tracks an S&P 500 like index from 1871 to the present. What I like about the calculator is it allows the user to establish a monthly contribution, with or without an adjustment for inflation, and to see nominal returns (without inflation adjustment) and real returns (with inflation). I found it interesting to compare the 40-year results starting in 1953, 1963, 1973 and 1983. I think it helps investors see both the impact of increasing your contributions with inflation as well as adjusting the final value for inflation. For investors interested in the results based on a lump sum investment simply put in your initial investment and zero for monthly investments. Just for fun I put in $3000 for a newborn child who would let it grow for 70 years (1953-2022). The last 70 years would have created (without costs) $3.6 million and inflation adjusted about $330,000. Starting 10 years earlier (1943-2012) the 70-year value would have been $5.2 million, and inflation adjusted $390,000. The exercise will also teach the student how random returns can be. Also, I think it is also instructive to see the randomness of inflation adjusted returns. And make sure you note that the results do not include taxes, fees or transaction costs. |
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SPIVA REPORT: One of the most important studies on fund returns The podcast opens with a heads up on an exciting AAII presentation on October 11 at 6:30 EST. Paul will make a one hour presentation on “The Case for Small Cap Value: The Good, the Bad and the Ugly.” This presentation will include some interesting new tables that give a new perspective to this productive equity asset class. After Paul speaks, Chris’ presentation will focus on 2 Funds for Life in retirement and how to select the Best In Class ETFs. One of Paul’s favorite Truth Tellers, Ben Carlson, has recently written, “The Luckiest Generation”. Paul reads highlights from the article. It turns out “The Luckiest Generation” faced a lot of serious headwinds. Then Paul suggests the steps we should take if we aren’t so lucky. The annual SPIVA Report is one of the most important studies in the industry on mutual fund performance. While many may wish to read the whole report, Paul focuses on the tables on pages 9, 10, 13, 14, 17 and 19. Those who take the time to review this information will hopefully reconsider holding any actively managed funds in their portfolio. |
Truth Teller- Larry Swedroe |
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Larry E. Swedroe is head of financial and economic research for Buckingham Strategic Wealth. Larry holds an MBA in finance and investment from New York University and a bachelor’s degree in finance from Baruch College. Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored or co-authored 18 more books about investing and behavioral finance. Larry is a sought-after speaker and prolific writer, and he contributes weekly to multiple national outlets including ETF.com. |
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Thank you so much for answering my question about international index funds and investing directly via local currencies! You are the two people in the world that I most wanted to ask this question!! It is SO nice that you are willing to do these follow up Q&A videos and answer our questions. Truly invaluable. You both are so generous to be donating your time to the public this way (in addition so all of the amazing talks and presentations) |