If you invested $100 at the beginning of 1970, how much would it be worth at the beginning of 2024?
The answer to that question depends on how you invested that $100. Would you buy gold? What about stocks or corporate bonds? Would you play it safe and go for Treasury bonds? Or maybe buy some real estate? How about if you found an investment that would keep up with inflation? What would $100 worth of 1970's dollars be worth after all that time?
Visual Capitalist's Dorothy Neufeld considered each of these options and charted the results. Here they are:
These results are based on data collected by NYU's Aswath Damodaran, which is a tremendous resource. Unless you have your own personal Wayback Machine, or are the beneficiary of some really savvy investing by someone who decided to put $100 to work in an investment in 1970 rather than spend it on 1970's consumer goods, the results shown in the chart are as close as you'll get to the answer to the question we asked at the beginning.
Here's Neufeld's discussion of the results she obtained by hypothetically investing $100 in 1970 through the end of 2023:
As we can see, a $100 investment in the S&P 500 (including reinvested dividends) in 1970 would be worth an impressive $22,419 in 2023.
Not only were U.S. stocks the top performing major asset class, they outpaced other investments by a wide margin. Consider how a $100 investment in corporate bonds would have grown to $7,775 over the period, or 65% lower than an investment in the S&P 500.
When it comes to gold, a $100 investment would have been worth $5,545 by 2023. During the 1970s and 2000s, gold boomed amid bouts of inflation and a falling U.S. dollar. By comparison, the S&P 500 saw much lower returns over these decades.
Real estate, another safe haven asset, grew on average 5.5% annually since 1970, with the highest gains seen in the decade through 2020. It’s worth noting that these numbers are from the Case-Shiller Home Price Index, which is based on purely price changes over time.
Given that real estate is a unique asset class, this doesn’t necessarily illustrate the returns that homeowners actually receive, factoring in leverage, property taxes, insurance, and other expenses. From this price perspective, a $100 investment would have grown to just $1,542 by 2023 due to slower price growth through the 1980s and 2000s weighing on overall gains.
The result for "cash" is the result of investing $100 in 3-month U.S. Treasury bills and continuously rolling the investment over all this time to keep up with inflation. If you had really kept it as cash and say stuck a $100 bill in a library book that you didn't open again until the beginning of 2024, we're afraid that $100 bill from 1970 will only go as far as $100 in 2024's dollars would if you went out and spent it.
But what if you decided to take that $100 and restart the experiment for real in 2024? How would you invest $100 today? What do you think your investment will be worth in, oh say, 2078?
Labels: data visualization, investing
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