Annual Total Return: 9.1%
Annual Real Total Return: 5.9%
Bought in January 1987, held for a realistic 30 years:
Annual Total Return: 9.8%
Annual Real Total Return: 7.0%
There's always going to be some deviation, but over any given multi-decade holding period, you will generally end up with a predictable 5-9% annualized (inflation-adjusted) return. That is more than zero. My point stands: long-term investment in the S&P 500 can be reasonably expected to gain value faster than inflation.
If you're interested, here's a simulator that looks at historic market data. You'll note that even the lowest possible percentile of 30-year holding periods will still yield a 3.43% inflation-adjusted total return: https://dqydj.com/sp-500-historical-return-calculator-popout...
Let's buy in August 1929 at 5338.69, and sell 20 years later, in August 1949, at 1822.87 (inflation-adjusted). Congratulations, you lost two thirds of your money.
Sell 30 years later instead? August 1959, at 5525.23. Wow, after 30 years you're up almost 3.5%!
Comments
Bought way back in August 1929:
Bought in January 1987, held for a realistic 30 years: There's always going to be some deviation, but over any given multi-decade holding period, you will generally end up with a predictable 5-9% annualized (inflation-adjusted) return. That is more than zero. My point stands: long-term investment in the S&P 500 can be reasonably expected to gain value faster than inflation.If you're interested, here's a simulator that looks at historic market data. You'll note that even the lowest possible percentile of 30-year holding periods will still yield a 3.43% inflation-adjusted total return: https://dqydj.com/sp-500-historical-return-calculator-popout...
You conveniently ignored half the problem by buying in 1929 and holding for 88 years, which is reasonable if you are currently about 140 years old.
If not, look at http://www.macrotrends.net/1319/dow-jones-100-year-historica...
Let's buy in August 1929 at 5338.69, and sell 20 years later, in August 1949, at 1822.87 (inflation-adjusted). Congratulations, you lost two thirds of your money.
Sell 30 years later instead? August 1959, at 5525.23. Wow, after 30 years you're up almost 3.5%!