Where can you find bank interest over the 1.1% ally is offering? Even if you did CD ladders,the last 15 years or so have had interest offerings of < 5%, mostly < 4% on 5 year CDs.
I'm not saying you aren't - I'm saying that assuming a 7% apr for the last 15 years from banks is not a good one - a savings accounts and CDs just don't pay out that high. Even if you got some big gains early (80s and early 90s) - the very low compounding rate since 2000 will squash those bank returns.
Not quite true. Early money dwarfs later money in any calculation. But the last 15 years would certainly put a damper on things. Would be nice if the app calculated real interest return for us!
(Note from the end of the chart linked til this month, I assumed the same interest rate).
And found that investing the once a month in a 6 month cd, with a dollar amount equal to the number of days in that month, plus reinvesting the amount coming due (principle + interest) that month from previous CDs, would yeild way less than the market according to this calculator:
In the CD case - just under $90K
In the stock case - just under $560K
If my math turns out to be incorrectly done - please let me know I like to learn, but I think I did this right.