Unexpectedly Intriguing!
June 24, 2009

Have you ever wanted to test out an investing strategy using historic stock market data? Or maybe just wanted to find out how much a hypothetical investment in the S&P 500 made between January 1871 and May 2009 would be worth after adjusting for inflation? Both with and without reinvesting dividends over all that time?

Today, we're putting all the S&P 500 data we have to work for you just so you can answer questions like these!

All you need to do is to select the dates you want to run your hypothetical investment between and to enter the amount of money to invest either from the very beginning or to add each month (beginning with that first month you select) for the duration that your investment runs.

We'll determine how much your investment would be worth assuming the amounts invested are adjusted for inflation for each month the investment is active and accounting for the effects of either not reinvesting dividends along the way or fully reinvesting dividends. Our other main assumptions are that no commissions, fees or taxes are paid by our hypothetical investor from their investment. We'll also calculate the average annualized rate of return you would have earned if you had invested all the money you did from the very beginning!

And it all starts... now!

Investing Period Data
Description Value
Beginning Date for Investment
Ending Date for Investment
Investment Data
Description Value
Initial Amount to Invest*
Amount to Invest Consistently Each Month*

Calculated Results Without Reinvesting Dividends Fully Reinvesting Dividends
Total Amount Invested
Gain [+] or Loss [-]
Final Investment Value
Average Annual Rate of Return
 * Investment values are adjusted for inflation to be current for the Ending Date.

Running some numbers for fun, we find that if you started with \$0.00 and invested \$100.00 each month beginning in January 2009, the \$200 you would have invested before selling in March 2009, when the S&P 500 hit bottom, would have fallen in value to \$186.62, an annualized loss of 34% if you had been reinvesting dividends.

On the other hand, if you had kept investing through May 2009, the \$400 you put to work in the S&P 500 would have risen in value to be worth nearly \$462, an annualized gain of 54%!

But for real fun, see how much \$1000 invested in January 1871 would be worth in May 2009 - both with and without the effects of reinvesting dividends! We don't want to spoil the surprise, but there's a \$7,741,392.08 difference!

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Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

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