Hi r/investing! Long time lurker, but first time poster. I have been doing analysis of S&P 500 returns out of my own curiosity, and thought I would share in case some of you found this interesting.
The basic question is this: how have annualized returns of S&P changed since 1950? In other words, how sensitive are my returns to the time of initial investment? I pulled monthly S&P 500 data and ran the numbers. Here are the results in chart form: https://imgur.com/rMGWtvo. The number on the y-axis tells me my "average return percentage", year over year, had I invested my money that given month. On average, you would have made about 7.54% per year.
I also created a histogram to easier visualized historic results here: https://imgur.com/HytXCxX. The distribution, as you can tell, is not "normal" at all.
My next step was to take inflation into account and see what that would do to my returns. As you would expect, annualized returns will now be significantly lower. You can see this for yourself here: https://imgur.com/yuOukjR. Histogram for these results is here: https://imgur.com/xaSHuKi.
Lastly, what would these numbers look like in terms of actual dollars? Say I put in 100 dollars at that given annualized rate, how much would I have after 30 years? On average, your 100 dollars would grow to almost 1000 dollars, and at most you would have had almost 5500 dollars. Not bad! Here is the chart: https://imgur.com/WoJRfJY
Anyways, let me know if you found this interesting or if you would like to see the underlying data.
Submitted February 23, 2019 at 04:55PM by Andromeda33046 https://ift.tt/2U4FVJP
