Stock Market Analyses

How much money would you have if you started investing 10 years ago?

In Investing by C.J. CatoLeave a Comment

THIS POST MAY CONTAIN AFFILIATE LINKS. I MAY RECEIVE COMMISSIONS FOR PURCHASES MADE THROUGH LINKS IN THE POST.

Everybody knows we need to start investing as soon as possible, but so many of us just haven’t “gotten around to it.” I’m pretty sure one of the reasons this happens is because we just don’t realize what we’re missing out on. So I thought I would put together a couple of very simple charts to illustrate just how powerful putting that money away is.

If you Invested $10K, 10 years ago

In this first chart we made an investment of $10,000, ten years ago, in a Total Stock Market Index fund. This is a real fund that tracks the entire U.S. market, and these are the real returns we would have received. As you can see, if we never touched that money and simply reinvested all the dividends, our $10,000 investment would have turned into $26,000 in ten years. That’s $16,000 in free money! Notice that we actually lost 25% of our money in the first six months! But we hung in there and were rewarded in the long run.

If you Invested the Avg Car Note

“But C.J., I don’t have no $10,000 to invest.” I get that… but are you buying a new car every 3 years like most of the country, or paying the now average car payment of $523 a month? Well… what if we weren’t? In this chart we see what happens when we invest America’s average car payment for ten years.

What is most alarming in this chart is that we can see that people are spending $63,000 in car payments over 10 years; that’s just incredible all by itself. Secondly, I would like to note just how little we get from our bank’s savings account. I was generous and assumed the bank gave us 1% APR, but most banks don’t offer anywhere close to that. Even with that 1%, ten years later and we still only made $3,000; and unfortunately due to inflation we actually didn’t make anything at all, we lost money. But look what happens if we invested the money in a low fee index fund. That’s almost $100,000 appreciating in our account, instead of $30,000 depreciating in our garage.

C.J. is the blogger behind the Vow of Practicality. “Let’s grow your wealth, increase your productivity, and maximize your happiness.”