Re:The Surprising Power of the Long Game
by neogodless on Monday October 29, 2018 @12:15PM
(#18328665)
There is an obvious flaw in your math. You are completely discounting investment returns. You don't have to "get lucky" to multiply your money over 35 years.
Ignoring inflation for the moment, if you invest $1750/month and the stock market returns 10%, after 35 years, you'll have roughly $6 million. So that means the teacher only needed to save $21k each year, and dump into index funds.
(The pre-inflation annualized return for the S&P 500 from 1980 to 2015 was 12.97% - if you use that for your assumptions, you only need to invest $875/month or $10,500 each year. Obviously after 35 years, that money will have lost some steam due to inflation, but it will have grown a ridiculous amount).
Footnote: The "retired teacher" article didn't seem to mention investments, beyond a few savings bonds and calling it a "portfolio", - or the actual time span of saving money. Just that she "worked" for 35 years.
Ignoring inflation for the moment, if you invest $1750/month and the stock market returns 10%, after 35 years, you'll have roughly $6 million. So that means the teacher only needed to save $21k each year, and dump into index funds.
(The pre-inflation annualized return for the S&P 500 from 1980 to 2015 was 12.97% - if you use that for your assumptions, you only need to invest $875/month or $10,500 each year. Obviously after 35 years, that money will have lost some steam due to inflation, but it will have grown a ridiculous amount).
Footnote: The "retired teacher" article didn't seem to mention investments, beyond a few savings bonds and calling it a "portfolio", - or the actual time span of saving money. Just that she "worked" for 35 years.