| Hey guys... I made the page. Just saw lots of traffic coming from here so figured I'd come check it out. A couple things I figured I should address after reading the comments: 1) Yahoo!'s historic S&P 500 data does not factor in dividends. So the returns would likely be 1-2% higher each year (which over time makes a very big difference). I should probably add a note on the page mentioning this. Here was my conundrum when making the tool: I picked the S&P 500 because it's the only index that allowed me to pull very, very old data (nearly 70 years) using Yahoo! Finance; plus, it's often the "go-to" index for discussing overall market performance. But it's not "real" in the sense that you can't actually buy shares, and it doesn't pay dividends. So I could make up my own method for factoring in dividends, but I wanted to go strictly by the numbers. When you factor in financial advisor fees / bad decisions that new investors make, it's probably enough to "counter" the lack of dividends, if you want to look at it that way. Plus, sites / companies are notorious for over-stating how much you can get annually by investing. I'd prefer to under-state it, if anything. Don't want to sell false hopes. 2) Regarding incremental, small deposits (and potential transation fees)... it's actually very easy to set up auto-investments in index funds that match the S&P 500 without ever incurring any fees. You could do $31 on the first of every month and basically simulate this. 3) Inflation would be useful to factor in, but it would also add confusion. This could be a cool add-on, but I'd have to think about the clearest way to demonstrate it. So would the 1950 daily amount be equivalent of $1 today? (so I'm guessing 20 cents or so?) Hope you guys enjoy the site. Feedback is great (positive or negative - I'm not sensitive). |
You may want to look at Robert Schiller's (of Case-Schiller index fame, among other things) data set available here: http://www.econ.yale.edu/~shiller/data.htm He has S&P dividends by quarter back to 1871.
Fees do make a difference, though they are pretty small in e.g. VFINX -> VFIAX. If you want to be super realistic you could build up the dollars a day at say the federal funds rate until you hit the VFINX minimum, then accumulate $100 batches at that rate before investing them in the S&P 500. Once the account hits VFIAX switch to that for fees. There's also taxes but that's just a mess because there are so many possible scenarios. Probably this whole paragraph is just overkill.
As for as inflation goes, the big thing is not the current amount of money, which after all is today's dollars and so easy to understand, but to try to get across the fact that in 1950 $1 was a heck of a lot more than it was today (about $10). Still not a huge amount of money perhaps, but not something you would just drop in a tip jar either.
That also gets to the point that is kind of a crazy investment strategy. In real terms you are investing the most when you are least able to afford to. Since it isn't supposed to be a serious strategy, instead more of something to think about that's no big deal, but it's worth noting.