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Started By
Message
Is this true?
Posted on 5/4/23 at 2:47 pm
Posted on 5/4/23 at 2:47 pm
"A quick reminder that if you open a Roth IRA at age 18.
And invest $500/month into the S&P 500 until age 65.
You will only spend $282,000 of your own money.
But at retirement, you'll have $5.76 Million."
LINK
And invest $500/month into the S&P 500 until age 65.
You will only spend $282,000 of your own money.
But at retirement, you'll have $5.76 Million."
LINK
8
Posted on 5/4/23 at 2:49 pm to Roy Curado
It was true in 1970 probably
Posted on 5/4/23 at 2:54 pm to Roy Curado
I mean it’s a math calculation based on an average rate of return.
I don’t know what rate of return he’s using and don’t feel like checking it but if you start investing early and assume 10% yearly returns (which is very reasonable) then yes you get insane numbers like this.
More time the better. 18 vs 30 vs 40 come out with very different numbers
S&P 500 has an average return of 9.82% since inception
I don’t know what rate of return he’s using and don’t feel like checking it but if you start investing early and assume 10% yearly returns (which is very reasonable) then yes you get insane numbers like this.
More time the better. 18 vs 30 vs 40 come out with very different numbers
S&P 500 has an average return of 9.82% since inception
This post was edited on 5/4/23 at 3:02 pm
Posted on 5/4/23 at 2:58 pm to Roy Curado
500 per month
50 years
9% return
$5.8M
Behold the power of compound interest
50 years
9% return
$5.8M
Behold the power of compound interest
This post was edited on 5/4/23 at 2:59 pm
Posted on 5/4/23 at 2:59 pm to Roy Curado
If you think you're going to get 10 percent returns each year then yeah, that's what you'll get over 47 years. Just do the math:
LINK
LINK
This post was edited on 5/4/23 at 3:00 pm
Posted on 5/4/23 at 3:22 pm to Cosmo
quote:
Is this true?
It was true in 1970 probably
Exactly! And $500/month in 1970 is the equivalent of $3,890 today.
And the median income of a family in 1970 was $9,870, or $822.50 per month.
Posted on 5/4/23 at 3:34 pm to Roy Curado
Yes that is true using whatever annual return the person is using. I'd bet he is using something in the 8%-10% range.
Compounding is a great thing, I would be more cautious with my analysis than assuming 8-10% annual growth though.
Compounding is a great thing, I would be more cautious with my analysis than assuming 8-10% annual growth though.
Posted on 5/4/23 at 11:43 pm to TigerTatorTots
quote:I mean going back to 1972 through April of 2023 (so 51 years, 4 months) , the time-weighted rate of return on the S&P 500 is 10.34% and the money-weighted rate of return (i.e., putting X amount of deals in monthly) is 10.78%, so I don’t think 8-10% expected return is overly optimistic.
Compounding is a great thing, I would be more cautious with my analysis than assuming 8-10% annual growth though.
This post was edited on 5/4/23 at 11:54 pm
Posted on 5/5/23 at 12:42 am to buckeye_vol
In 1970 I was in the Navy,I only made about $200/ month before taxes.
Posted on 5/5/23 at 3:38 pm to Roy Curado
The problem is most people don’t have $500 per month to invest while they’re in college or first jobs.
Posted on 5/5/23 at 5:17 pm to Auburn80
More than that, the problem is consistency over time. People are not machines and life gets in the way.
I myself can only contribute $250/month and honestly should probably discontinue my auto invest right now.
Had a kid last year and income isn’t great.
I myself can only contribute $250/month and honestly should probably discontinue my auto invest right now.
Had a kid last year and income isn’t great.
Posted on 5/5/23 at 5:22 pm to Auburn80
quote:
The problem is most people don’t have $500 per month to invest while they’re in college or first jobs.
I started my first year truly working, but that saw seven years lost between undergrad and law school. It's why I plan on making my future kids a deal regarding subsidizing their retirement contributions as early as possible and then weening them off from there.
Posted on 5/5/23 at 6:05 pm to Cosmo
In 1970, you couldn't put $6K into a Roth, 40 years later you still couldn't.
Posted on 5/8/23 at 10:52 am to TigerintheNO
quote:Limit of 6500 for 2023
In 1970, you couldn't put $6K into a Roth, 40 years later you still couldn't.
Posted on 5/8/23 at 12:16 pm to buckeye_vol
quote:
I mean going back to 1972 through April of 2023 (so 51 years, 4 months) , the time-weighted rate of return on the S&P 500 is 10.34% and the money-weighted rate of return (i.e., putting X amount of deals in monthly) is 10.78%, so I don’t think 8-10% expected return is overly optimistic
How many companies in the S&P 500 in 1972 are still in the S&P 500 today?
These indexes aren't exactly reality because they constantly replace the losers with the next winners.
As a measure of top company performance, they lie.
Posted on 5/8/23 at 1:01 pm to Roy Curado
Depends on whether you turned 18 in 1981 or 1929.
Posted on 5/8/23 at 1:06 pm to Roy Curado
quote:
But at retirement, you'll have $5.76 Million.
This will be a nice chunk of change to retire on. It will not be the same $5.76 million we know of today.
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