4 ms·

"The annualised total return on the S&P since 2000 has been 3.31%". This is way off. I'm not sure what their mistake is. The alfphaantagelive calculator is r

"The annualised total return on the S&P since 2000 has been 3.31%". This is way off. I'm not sure what their mistake is. The alfphaantagelive calculator is reporting much lower numbers than the real value. Yahoo has a symbol for S&P 500 total return: ^SP500TR Check out: https://finance.yahoo.com/quote/%5ESP500TR/chart?p=%5ESP500TR https://finance.yahoo.com/quote/%5ESP500TR/chart?p=%5ESP500T... Punch in December 2000 for start and today's date for end. You'll get 398% total return. 398/21 = 19% annual return. Total return includes dividend re-investment. The alphavatangelive calculator says 3.31%, but even without dividend reinvestment the S&P 500 reports 11% average annual gains. This does not price in inflation which historically reported as 3% over long periods and was much lower until recently. Damodran has as good historical financial returns summary page: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/... . According to the spreadsheet linked to on that page, S&P 500 returns with dividend reinvested is 11.64% since 1928. Assuming 4% inflation, that's 7.64% annual returns. So going all in on the stock market over a long time you can withdraw 7%. Even through world wars, depressions and stagflation periods. Some decades will be better than others.

kccqzy 5y ago
> Punch in December 2000 for start and today's date for end. You'll get 398% total return. 398/21 = 19% annual return. I don't think you understand how percentages work. 19% annual return means on average every year you get 19% of the amount you have at the beginning of the year, not 19% of the amount when you began investing in December 2000. If the 21-year return is 398%, the correct annualized return is pow(1+3.98,1/21)-1 which is 7.9%.
- drocer88 5y ago
  Thanks for the clarification. Mea culpa. That 19% seemed too high. Note the spreadsheet from Professor Damadoaran : http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls The years 2001-2020 inclusive S&P 500 arithmetic average inflation adjusted total return is 6.79% ( =average(o92:o111) ). Which is below the 1928-2020 average return of 8.5%. Inflation might be underestimated. 6.7 is a lot closer to your calculation!

kccqzy 5y ago

> Punch in December 2000 for start and today's date for end. You'll get 398% total return. 398/21 = 19% annual return. I don't think you understand how percentages work. 19% annual return means on average every year you get 19% of the amount you have at the beginning of the year, not 19% of the amount when you began investing in December 2000. If the 21-year return is 398%, the correct annualized return is pow(1+3.98,1/21)-1 which is 7.9%.

drocer88 5y ago
Thanks for the clarification. Mea culpa. That 19% seemed too high. Note the spreadsheet from Professor Damadoaran : http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls The years 2001-2020 inclusive S&P 500 arithmetic average inflation adjusted total return is 6.79% ( =average(o92:o111) ). Which is below the 1928-2020 average return of 8.5%. Inflation might be underestimated. 6.7 is a lot closer to your calculation!