Did Your Money Really Double Every 7 Years?

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oilrig
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Did Your Money Really Double Every 7 Years?

Post by oilrig »

Average annual S&P 500 returns since 1957 have been around 10%, which means in theory that money doubled every 7 years using the rule of 72.

Im approaching the $1 million mark in my 30's, and I'm wondering if that money will really compound to $32 million in 35 years, assuming a 10% return (I know its not a guarantee), and assuming that money doubles every 7 years and I add nothing else to it. I know 10% returns are never guaranteed, I know theres inflation, and I know anything can happen from now until then, but Im just using 10% for the sake of this topic and from historical returns.

Im curious, for those who had a million or a similar amount in the S&P 500 20-30 years ago, did your money double every 7 years and you ended up with $20-30 million+ after not adding another dime?
Last edited by oilrig on Tue May 14, 2024 7:54 pm, edited 1 time in total.
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TomatoTomahto
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Re: Did Your Money Really Double Every 7 Years?

Post by TomatoTomahto »

No. Look up “tax drag.”

Most of us have added money for years, retired, and then took money out. I’d be surprised if any BH meets your criteria.
I get the FI part but not the RE part of FIRE.
CletusCaddy
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Re: Did Your Money Really Double Every 7 Years?

Post by CletusCaddy »

oilrig wrote: Tue May 14, 2024 9:56 am
Im approaching the $1 million mark in my 30's, and I'm wondering if that money will really compound to $32 million in 35 years, assuming a 10% return (I know its not a guarantee), and that money doubles every 7 years and I add nothing else to it.
Are you going to be 100% S&P 500 into your 70s?
barnaclebob
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Re: Did Your Money Really Double Every 7 Years?

Post by barnaclebob »

But if returns are a little lower and you double every 10 years then you are looking at like 10-12 mil. So a small change in return can greatly change the total in 35 years. By then inflation may make that effectively 5-6mil.

As a slightly different fruit of a data point, our net worth was 1 mil in 8/2016, 2 mil in 5/2019, and we could hit 4 mil in the next couple months depending on market movements. But this includes contributions and home value. Our doubling time has been much shorter than 7 years but I expect it to get longer as contributions become a smaller proportion of the increase. Household income was about 200k in 2016 and steadily increased 300k now, total savings rate was about 50% for the whole period.
Last edited by barnaclebob on Tue May 14, 2024 10:18 am, edited 1 time in total.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

CletusCaddy wrote: Tue May 14, 2024 10:05 am
oilrig wrote: Tue May 14, 2024 9:56 am
Im approaching the $1 million mark in my 30's, and I'm wondering if that money will really compound to $32 million in 35 years, assuming a 10% return (I know its not a guarantee), and that money doubles every 7 years and I add nothing else to it.
Are you going to be 100% S&P 500 into your 70s?
No. I have a small certain percentage in bonds and will continue to add as I get older. But the majority of my money is in the S&P 500 and Im just using the 100% S&P for argument's sake.
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Clever_Username
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Re: Did Your Money Really Double Every 7 Years?

Post by Clever_Username »

First of all, a word of caution: look at real growth, not nominal growth. I believe the 10% figure you're quoting is nominal growth, meaning it does not account for inflation. If your wealth grows 10%, but inflation is 3%, you've really grown less than 10% (but still positive).

Also, growth is geometric; two years at 10% is different from a flat year and a year of 20%.

As for not contributing, I saw somewhere that contributions account for half of a typical nest egg, while growth is the other half. I haven't given it much thought to see if that makes sense, nor do I recall where I heard that, but I certainly wouldn't stop contributing just because of past performance, even if I thought future performance would be similar.

Just the same, congratulations on hitting the two comma club in your 30s. That's a combination of many things, including good choices and good discipline. I joined the club a few years ago, in my late 30s, and I am optimistic for my financial future from here. 30 months after joining the two comma club, my total hit $1.4M, although the past 30 months have not been historically typical in terms of performance.

As for me, I had a net-worth of about $0 fourteen years ago, and it has much more than doubled since then. :D Okay, I started my investing journey in 2012, that figure is a little misleading (hopefully you found it funny).
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

barnaclebob wrote: Tue May 14, 2024 10:05 am
As a slightly different fruit of a data point, our net worth was 1 mil in 8/2016, 2 mil in 5/2019, and we could hit 4 mil in the next couple months depending on market movements. But this includes contributions and home value.
Thanks for sharing this.
Normchad
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Re: Did Your Money Really Double Every 7 Years?

Post by Normchad »

I can’t honestly answer the question with any precision. My portfolio grew steadily and consistently all throughout my career. Including the dot com bomb and the GFC. But I was also adding to it along the way, and so was my employer.

I will say this though. It took me 17 years to get to a million. Then 7 more to get to two million. So for that period of time, roughly, yes.

The big lesson though is that compounding really picks up speed once it gets going. If you had $5M in the S&P a year ago, you’d have made another million just in the last year.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

Clever_Username wrote: Tue May 14, 2024 10:11 am First of all, a word of caution: look at real growth, not nominal growth. I believe the 10% figure you're quoting is nominal growth, meaning it does not account for inflation. If your wealth grows 10%, but inflation is 3%, you've really grown less than 10% (but still positive).

Also, growth is geometric; two years at 10% is different from a flat year and a year of 20%.

As for not contributing, I saw somewhere that contributions account for half of a typical nest egg, while growth is the other half. I haven't given it much thought to see if that makes sense, nor do I recall where I heard that, but I certainly wouldn't stop contributing just because of past performance, even if I thought future performance would be similar.

Just the same, congratulations on hitting the two comma club in your 30s. That's a combination of many things, including good choices and good discipline. I joined the club a few years ago, in my late 30s, and I am optimistic for my financial future from here. 30 months after joining the two comma club, my total hit $1.4M, although the past 30 months have not been historically typical in terms of performance.

As for me, I had a net-worth of about $0 fourteen years ago, and it has much more than doubled since then. :D Okay, I started my investing journey in 2012, that figure is a little misleading (hopefully you found it funny).
Yea I understand the inflation part, but Im just going off the money doubling every 7 years part regardless of inflation. I will keep contributing and adding to the pile.

Thanks for that. Congrats to you as well!
UpperNwGuy
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Re: Did Your Money Really Double Every 7 Years?

Post by UpperNwGuy »

oilrig wrote: Tue May 14, 2024 9:56 am Average annual S&P 500 returns since 1957 have been around 10%, which means in theory that money doubled every 7 years using the rule of 72.

Im approaching the $1 million mark in my 30's, and I'm wondering if that money will really compound to $32 million in 35 years, assuming a 10% return (I know its not a guarantee), and that money doubles every 7 years and I add nothing else to it. I know 10% returns are never guaranteed, and anything can happen from now until then, but Im just using 10% for the sake of this topic and from historical returns.

Im curious, for those who had a million or a similar amount in the S&P 500 20-30 years ago, did your money double every 7 years and you ended up with $20-30 million+ after not adding another dime?
There is no way to know because I've been putting new money into my portfolio every month, and I've also added some large amounts resulting from financial windfalls.

I monitor my portfolio as a whole, not fund by fund. My portfolio also includes small caps, international, and bonds. All of those have dragged down returns compared to a 100% S&P 500 portfolio.

If I want to see what the S&P 500 portion of my portfolio has done, I go to Portfolio Visualizer. Whatever the index has done, that portion of my portfolio has done the same (minus expenses).... and that is true for everyone else who responds to your question.
Topic Author
oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

Normchad wrote: Tue May 14, 2024 10:19 am
The big lesson though is that compounding really picks up speed once it gets going. If you had $5M in the S&P a year ago, you’d have made another million just in the last year.
Pretty eye opening stat. Agreed, money seems to really take off around the million mark.
stereotaxis
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Re: Did Your Money Really Double Every 7 Years?

Post by stereotaxis »

Actually when including contributions it doubled every 5-6 years in nominal dollars. I had it in >90% in SP500.
Last edited by stereotaxis on Tue May 14, 2024 10:32 am, edited 1 time in total.
anoop
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Re: Did Your Money Really Double Every 7 Years?

Post by anoop »

Yes, it really will double every 7 years if future performance keeps up.

It may not happen smoothly, though. If you bought at the peak in 2000, you made nothing until after 2012. But then things went vertical after that.

Congrats on having so much in your 30's!
JakeyLee
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Re: Did Your Money Really Double Every 7 Years?

Post by JakeyLee »

I’ve given similar hypotheticals some thought. 30 years ago it may have took the average investor 25-40 years just to get to their first million. People forget how much lower the pre-tax limits were on 401k contributions. Most of the 80’s we were in the mid $7k range. We didn’t see individual contributions rise to $10k until the year 2000 :shock: By the time that next 30 years rolled around, many investors would have started spending down in retirement or possibly passed on.

Of course we are likely looking at 100% equity allocation in this hypothetical. Surely most of these investors would have dialed risk back after 30-50 years in the market. So the guy/gal who had a million in savings 30 years ago was not getting the “10% average” return with their portfolio in their following sunset years. Buy hey, they didn’t suffer as much in 2008-2009 :beer
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

stereotaxis wrote: Tue May 14, 2024 10:31 am Actually when including contributions it doubled every 5-6 years in nominal dollars. I had it in >90% in SP500.
Good to hear!
cshell2
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Re: Did Your Money Really Double Every 7 Years?

Post by cshell2 »

My retirement accounts tripled in the past 7 years (including contributions). I don't have accurate data going back 7 years prior to that, but it had doubled from what it was 5 years prior (again, including contributions). Of course, the past 12 years have been pretty good ones.
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lthenderson
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Re: Did Your Money Really Double Every 7 Years?

Post by lthenderson »

I cashed out the last of my company shares in 2015 and invested them Vanguard stock (S&P500 and International) and bond index funds. It doubled in exactly 7 years with no added contributions. I'm not sure what the mix was between those three groups the entire time but probably about 60% for the S&P500 portion. In that same period of time, my overall assets tripled including contributions. Overall, looking back through the years, my overall portfolio doubles about every 4 years including contributions, growth, inheritances, etc.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

lthenderson wrote: Tue May 14, 2024 10:49 am I cashed out the last of my company shares in 2015 and invested them Vanguard stock (S&P500 and International) and bond index funds. It doubled in exactly 7 years with no added contributions. I'm not sure what the mix was between those three groups the entire time but probably about 60% for the S&P500 portion. In that same period of time, my overall assets tripled including contributions. Overall, looking back through the years, my overall portfolio doubles about every 4 years including contributions, growth, inheritances, etc.
Thank you! This is exactly what I was looking for. Seems like money will double every 7 years with zero contributions, and double every 4-5 years with added contributions. Of course, your mileage may vary and this isnt an absolute rule.
robbierob03
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Re: Did Your Money Really Double Every 7 Years?

Post by robbierob03 »

Out of pure curiosity I went and looked at my former employer's 401k balance to check. I have another two and half months for the full seven years, but as of yesterday the ending balance was a little over 195% from when I left and stopped contributing. I was probably 65-70% total market during most of that time, but the 15% international allocation and 15% small cap growth turned out to not be the most lucrative decision. Currently that account is now 100% total market to align with my very simple portfolio going forward.
iamlucky13
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Re: Did Your Money Really Double Every 7 Years?

Post by iamlucky13 »

Here's a quick historical review for you based on the Vanguard 500. Doubling periods began as follows:
https://www.morningstar.com/funds/xnas/vfinx/chart

- 2x: Mar. 2019 (5 years)
- 4x: Apr. 2013 (11 years)
- 8x: Apr. 2009 (15 years)
- 16x: Jun. 1995 (29 years)*
- 32x: May 1989 (35 years)

Wow! I actually didn't expect it to be spot on at 32x after 35 years.

After adjusting for the 2.68% annualized inflation that occurred over that time period, the real returns are 12.5x

Nitpick: As I'm sure you know, the rule of 72 is an approximation, and you rounded, but 10% returns compounded for 35 years results in 28.1x the starting value, not 32x.

* The .com bust and global financial crisis both occurred this period, reigning in that ol' irrational exuberance. Looking at the pace since 2009 once again tickles my suspicion we are in another irrational exuberance phase, although I will continue to respond by doing nothing
stereotaxis wrote: Tue May 14, 2024 10:31 am Actually when including contributions it doubled every 5-6 years in nominal dollars. I had it in >90% in SP500.
Taking a quick look at my retirement savings spreadsheet, I see similar. Earlier on in my records, it was 4 year doubling, and even earlier a 3 year doubling. I didn't keep track earlier than that.

Keep in mind, my contributions are still a very significant portion of portfolio growth. It was only in the last 5 years I reached the point where returns typically exceeded contributions.

I am roughly 70% total US, 30% total international. While the contributions have been a significant accelerating factor in the doubling versus returns alone, the under-performance of international has been a slowing factor.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

iamlucky13 wrote: Tue May 14, 2024 11:58 am Here's a quick historical review for you based on the Vanguard 500. Doubling periods began as follows:
https://www.morningstar.com/funds/xnas/vfinx/chart

- 2x: Mar. 2019 (5 years)
- 4x: Apr. 2013 (11 years)
- 8x: Apr. 2009 (15 years)
- 16x: Jun. 1995 (29 years)*
- 32x: May 1989 (35 years)

Wow! I actually didn't expect it to be spot on at 32x after 35 years.

After adjusting for the 2.68% annualized inflation that occurred over that time period, the real returns are 12.5x

Nitpick: As I'm sure you know, the rule of 72 is an approximation, and you rounded, but 10% returns compounded for 35 years results in 28.1x the starting value, not 32x.

* The .com bust and global financial crisis both occurred this period, reigning in that ol' irrational exuberance. Looking at the pace since 2009 once again tickles my suspicion we are in another irrational exuberance phase, although I will continue to respond by doing nothing
stereotaxis wrote: Tue May 14, 2024 10:31 am Actually when including contributions it doubled every 5-6 years in nominal dollars. I had it in >90% in SP500.
Taking a quick look at my retirement savings spreadsheet, I see similar. Earlier on in my records, it was 4 year doubling, and even earlier a 3 year doubling. I didn't keep track earlier than that.

Keep in mind, my contributions are still a very significant portion of portfolio growth. It was only in the last 5 years I reached the point where returns typically exceeded contributions.

I am roughly 70% total US, 30% total international. While the contributions have been a significant accelerating factor in the doubling versus returns alone, the under-performance of international has been a slowing factor.
Thanks for this data. Crazy that its on the dot at 32x after 35 years. I guess that settles it lol.
cshell2
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Re: Did Your Money Really Double Every 7 Years?

Post by cshell2 »

I do have one fund that I know was 22K in the Fall of 2002 (the year I quit my job and rolled it to an IRA). I have not added a dime to that in the past 22 years and it is now worth 226K, so more than doubled every 7 years.

2X - 44K
4X- 88K
8X - 176K
avalpert1
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Re: Did Your Money Really Double Every 7 Years?

Post by avalpert1 »

The short answer of course is no, your money in the S&P 500 doesn't really double every 7 years. 'Average returns' are not the same thing as realized returns and don't happen in anything approaching a straightline... But let's use an illustrative example of someone who invested in VFINX 28 years ago in May of 1996:

-His $1m doubled to $2m is less than 3 years passing that mark in January of '99
-It passed that mark again on the way down in the 5th year of investing in fall of '01
-Seven years in, in May of '03 it had not doubled and was at ~$1.6m
-At about 8.5 years in it reached the doubling point of $2m (again)
-Of course 12 years in it once again reached that $2m mark, though this time it was (again) on the way down
-By the time you get to 14 years in it had one again pierced $2m, but at $2.1m it was way short of doubling a second time
-In year 20 it did reach that second doubling at pass $4m, but by the end of year 21 it was still well short of making it to $8m - at ~$5.3
-In year 24 it finally did pierce that third doubling, but now at the end of 28 years it is still well short of a fourth doubling at $12.5m

Might it catch up and get to $32m in the next 7 years, it might - might it stall out and not be above $16m in seven year, that's certainly possible too.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

cshell2 wrote: Tue May 14, 2024 12:16 pm I do have one fund that I know was 22K in the Fall of 2002 (the year I quit my job and rolled it to an IRA). I have not added a dime to that in the past 22 years and it is now worth 226K, so more than doubled every 7 years.

2X - 44K
4X- 88K
8X - 176K
This is exactly the kind of info I was looking for. Its very encouraging. Thanks!
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ResearchMed
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Re: Did Your Money Really Double Every 7 Years?

Post by ResearchMed »

UpperNwGuy wrote: Tue May 14, 2024 10:25 am
...
There is no way to know because I've been putting new money into my portfolio every month, and I've also added some large amounts resulting from financial windfalls.

I monitor my portfolio as a whole, not fund by fund. My portfolio also includes small caps, international, and bonds. All of those have dragged down returns compared to a 100% S&P 500 portfolio.

If I want to see what the S&P 500 portion of my portfolio has done, I go to Portfolio Visualizer. Whatever the index has done, that portion of my portfolio has done the same (minus expenses).... and that is true for everyone else who responds to your question.

This ^^ is the answer, from UpperNwGuy.

Almost all of us have holdings other than the "S&P 500". And most of us are either adding at least some money over time, if in the accumulation period, or perhaps removing some money, if in the "using the retirement money during retirement" period.

But to *see* how the S&P 500 "does" (or did), use some measure of just that, the S&P 500!
Then you don't need to worry about any effects of each person's tinkering/adding/subtracting from their portfolio, or if they invest in anything other than the S&P 500.

And if you want to know what *your* investment in S&P 500 would have done over the past X years, find that figure, and then deduct whatever fees you might have. That alone should be interesting, if you happen to have relatively high fees and don't realize how that can eat away at the total amount.
It's not tricky.

You've been a BH member for several years now.
You should realize that almost no one would fit your criteria of:
"... those who had a million or a similar amount in the S&P 500 20-30 years ago, did your money double every 7 years and you ended up with $20-30 million+ after not adding another dime?"
Your question really needs to be a thought experiment, or a simple research task looking at the actual returns over the <number of years you are interested in>.

And your question assumes that the returns are constant over time, which is not real life.
But that assumption will give you your answer from the historical total returns of S&P 500.

GC
This signature is a placebo. You are in the control group.
marielake
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Re: Did Your Money Really Double Every 7 Years?

Post by marielake »

Doesn't answer your question, but your post prompted me to look at my funds. In 2016 I retired with a small pension fund with option for monthly check or lump sum. I opted for lump sum and because I wanted to see if I made the right decision, I put it into Fidelity 500 and left it there without adding or withdrawing. It doubled in less than 5 years. Today it is up 323% from the original investment. Also, its in a tax deferred fund.
Last edited by marielake on Tue May 14, 2024 2:45 pm, edited 2 times in total.
alfaspider
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Re: Did Your Money Really Double Every 7 Years?

Post by alfaspider »

The rule of 72 is simply a math shortcut. If your total return were a steady 10% every year with no reduction for tax or inflation, it is mathematically true. But as others have said, your "real" gain won't necessarily be double every 7 years due to lumpiness in returns, tax drag (if applicable), and inflation. We've gone long periods with poor returns and we've had periods with returns way above normal. Nobody knows what the future holds.

Just speaking for me personally: It took ~5 years of savings from zero to hit $1MM net worth (2018), 3.5 more to hit $2MM (late 2021), 2.5 more to hit $3MM (2024). I've done better than doubling every 7 years, even on real terms. But that was also aggressive contributions and non-stock market returns. Since my income is unlikely to increase much, the market will have a larger impact that contributions going forward.
PhoebeCoco
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Re: Did Your Money Really Double Every 7 Years?

Post by PhoebeCoco »

I retired in 2018, and stopped contributing to my retirement account.
I have taken out an average of 2% each year since then.
I received a small inheritance in 2021.

My accounts have doubled since 2018.
This has been a pleasant surprise, since I had expected the accounts to slowly dwindle or stay the same as I took money out.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

ResearchMed wrote: Tue May 14, 2024 12:30 pm
UpperNwGuy wrote: Tue May 14, 2024 10:25 am
...
There is no way to know because I've been putting new money into my portfolio every month, and I've also added some large amounts resulting from financial windfalls.

I monitor my portfolio as a whole, not fund by fund. My portfolio also includes small caps, international, and bonds. All of those have dragged down returns compared to a 100% S&P 500 portfolio.

If I want to see what the S&P 500 portion of my portfolio has done, I go to Portfolio Visualizer. Whatever the index has done, that portion of my portfolio has done the same (minus expenses).... and that is true for everyone else who responds to your question.

This ^^ is the answer, from UpperNwGuy.

Almost all of us have holdings other than the "S&P 500". And most of us are either adding at least some money over time, if in the accumulation period, or perhaps removing some money, if in the "using the retirement money during retirement" period.

But to *see* how the S&P 500 "does" (or did), use some measure of just that, the S&P 500!
Then you don't need to worry about any effects of each person's tinkering/adding/subtracting from their portfolio, or if they invest in anything other than the S&P 500.

And if you want to know what *your* investment in S&P 500 would have done over the past X years, find that figure, and then deduct whatever fees you might have. That alone should be interesting, if you happen to have relatively high fees and don't realize how that can eat away at the total amount.
It's not tricky.

You've been a BH member for several years now.
You should realize that almost no one would fit your criteria of:
"... those who had a million or a similar amount in the S&P 500 20-30 years ago, did your money double every 7 years and you ended up with $20-30 million+ after not adding another dime?"
Your question really needs to be a thought experiment, or a simple research task looking at the actual returns over the <number of years you are interested in>.

And your question assumes that the returns are constant over time, which is not real life.
But that assumption will give you your answer from the historical total returns of S&P 500.

GC
Yea I get it, maybe it was a dumb question lol. As I reach a million, I was just thinking a lot about my portfolio lately and the future doubles I have left. There were a few posters above who gave examples of a lump sum of money and how it fared throughout the years without additional contributions.

I got my answer :)
gavinsiu
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Re: Did Your Money Really Double Every 7 Years?

Post by gavinsiu »

That is only an average. You will more likely have a different return depending on luck. You can play around with this with portfolio visualizer, but $1M in 1972 will become $9M in 1992. The same time period from 2000 to 2020 would net you $4 million. Keep in mind that these are not inflation adjusted return. That $4 million is only worth $2 million in 2000 dollars. There's also the effect of taxes and fees. If you are not careful, it can take a good chunk out of your return. It's also hard to stay the course and sell out at some point, ruining the compounding effect.

You may be better off running a Monte Carlo. This will give you a range of return, which you should assume. You will likely fall in the range, but it's not an absolute. You can still do better or worse than predicted.

The lesson from the doubling every 7 years is that your accumulation rate accelerates. It takes forever to get to $1M, but the next million is much faster and the next is much faster yet. The bulk of your return will be near your goal. You should start as early as possible or with a small fortune or both.
BanquetBeer
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Re: Did Your Money Really Double Every 7 Years?

Post by BanquetBeer »

I have an account that I don’t contribute to. Invested:
45% S&P
43% total market
11% total international market
1% balanced

My money today is double from the account balance:
4 years 2 months,
5 years 6 months,
6 years 2 months, or
6 years 7 months ago.

The stock market can be volatile
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celia
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Re: Did Your Money Really Double Every 7 Years?

Post by celia »

TomatoTomahto wrote: Tue May 14, 2024 10:01 am No. Look up “tax drag.”

Most of us have added money for years, retired, and then took money out. I’d be surprised if any BH meets your criteria.
That's not all. You need to account for dividends, interest, splits, re-balancing, transferring between accounts, etc.

I rarely logged into my account for the last year or two. But I signed in last night and saw lots of transactions had been done automatically. There was even a new holding I didn't recognize. Before I was about to call Vanguard, I googled the new company and found that it had recently been spinned off of another stock I own. And that explains why the original stock dropped in value.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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Re: Did Your Money Really Double Every 7 Years?

Post by bighatnohorse »

I think it did double. We opened a 529 plan for nieces kids (about 8 years old at the time) which was about ten years ago.
My wife passed away and the 529 is now under my administration. I don't remember when we opened the 529 but it was $8K at the time and it's now $20K in about ten years.
Invested in index to the S&P.

(Vanguard won't provide information prior to the year that I inherited the accounts - so beginning date isn't available and I don't remember all that well.)
HIinvestor
Posts: 1951
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Re: Did Your Money Really Double Every 7 Years?

Post by HIinvestor »

In 2012, we put $200k into a post-tax voluntary contribution plan that we rolled into a ROTH IRA. Its currently about $900k with no additions by us.
secondcor521
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Re: Did Your Money Really Double Every 7 Years?

Post by secondcor521 »

I've been, more or less, between 90% and 100% S&P500 since 1987, and the vast majority of that time over 95%. Most has been in IRAs, so little tax drag. I was earning and contributing to the stash through 2016, then have been taking 1% to 2% for spending since then.

I maintain net worth milestones in a spreadsheet, and starting with a particular recent number $X and going backwards in time:

12/31/23 $X
1/7/15 $X/2
7/1/11 $X/4
7/19/06 $X/8

That of course is nominal growth, but my personal inflation rate as I measure it is about 0.5% annually, so it's pretty close to real numbers for me as well.

...

Another example is that I started getting interested in the topic of early retirement in the mid 1990's. I built a predictive spreadsheet then based on my actual numbers, 10% growth, 3% inflation. It always predicted a retirement date between about 2012 (back in the late 90's boom IIRC) and 2017 (when things weren't as good). I ended up retiring in February 2016.

...

So yes, given all the caveats so far about lumpiness, AA, adding/removing, taxes, and maybe the future won't be as good, the math itself does really work, which is what I think the OP was wondering.
mariezzz
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Re: Did Your Money Really Double Every 7 Years?

Post by mariezzz »

Accounts with 100% VTSAX or 100% VIIIX just about tripled in the last 8.5 years. So some stretches of time are really good; others not as much. That's without factoring anything paid in (future) taxes; the accounts are retirement. And doesn't factor in inflation. I have a spreadsheet in which I track these 2 accounts & update every so often.

These accounts have dividends reinvested; no contributions since before 12/31/2015.
From 12/31/2015 to 12/4/2020, they doubled; and now, they've both about tripled - the VTSAX account lags the VIIIX account by a little, presumably due to a slightly higher expense ratio.
KneePartsPro
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Re: Did Your Money Really Double Every 7 Years?

Post by KneePartsPro »

oilrig wrote: Tue May 14, 2024 12:38 pm
ResearchMed wrote: Tue May 14, 2024 12:30 pm
UpperNwGuy wrote: Tue May 14, 2024 10:25 am
...
There is no way to know because I've been putting new money into my portfolio every month, and I've also added some large amounts resulting from financial windfalls.

I monitor my portfolio as a whole, not fund by fund. My portfolio also includes small caps, international, and bonds. All of those have dragged down returns compared to a 100% S&P 500 portfolio.

If I want to see what the S&P 500 portion of my portfolio has done, I go to Portfolio Visualizer. Whatever the index has done, that portion of my portfolio has done the same (minus expenses).... and that is true for everyone else who responds to your question.

This ^^ is the answer, from UpperNwGuy.

Almost all of us have holdings other than the "S&P 500". And most of us are either adding at least some money over time, if in the accumulation period, or perhaps removing some money, if in the "using the retirement money during retirement" period.

But to *see* how the S&P 500 "does" (or did), use some measure of just that, the S&P 500!
Then you don't need to worry about any effects of each person's tinkering/adding/subtracting from their portfolio, or if they invest in anything other than the S&P 500.

And if you want to know what *your* investment in S&P 500 would have done over the past X years, find that figure, and then deduct whatever fees you might have. That alone should be interesting, if you happen to have relatively high fees and don't realize how that can eat away at the total amount.
It's not tricky.

You've been a BH member for several years now.
You should realize that almost no one would fit your criteria of:
"... those who had a million or a similar amount in the S&P 500 20-30 years ago, did your money double every 7 years and you ended up with $20-30 million+ after not adding another dime?"
Your question really needs to be a thought experiment, or a simple research task looking at the actual returns over the <number of years you are interested in>.

And your question assumes that the returns are constant over time, which is not real life.
But that assumption will give you your answer from the historical total returns of S&P 500.

GC
...maybe it was a dumb question lol. As I reach a million...

I got my answer :)
Not a dumb question by any measure. Congratulations on approaching 1M.
Fess McGee
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Re: Did Your Money Really Double Every 7 Years?

Post by Fess McGee »

Been doing a lot of this same kind of thinking lately as well. I've got 1.045M in a 401K and it would be great if I'm at 1.5M (nominal) in 4 years when I want to retire. Will max out plus catch-up until then and get a match as well. If I make it, that's great. If I don't, it's not a huge deal. Historically, I should make it but that's a short horizon and one bad year would put me behind. I'm still pretty aggressive in equities since I have some income streams in retirement and figure I can be a little more aggressive but that cuts both ways in a down market. We'll see.
helloeveryone
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Re: Did Your Money Really Double Every 7 Years?

Post by helloeveryone »

Only been investing since 2009 and it’s monthly investments in S&P 500. But my overall AA is 80:20. I’m on the compound curve and things have doubled more than every 7.2 years so far.

According to compound calculator if your $1 million is compounded over 35 years, assuming a 10% return, entering quarterly compound frequency - I show $31.7 millions dollars.

Assuming it’s all in a 401k or 403b. Your RMD’s will be fun.
KyleAAA
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Re: Did Your Money Really Double Every 7 Years?

Post by KyleAAA »

No, it won't compound to $35 million. Only to $28,102,436.85 If you ignore taxes and investment expenses.
bombcar
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Re: Did Your Money Really Double Every 7 Years?

Post by bombcar »

I have an IRA from a 401(k) that is now more than ten years old, and since it's separate from others I can look at it.

Over ten years, it has slightly more than doubled, with nothing else being done, and it would have done better if I had completely left it alone over that time.
brian2013
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Re: Did Your Money Really Double Every 7 Years?

Post by brian2013 »

Thanks for the question, I've been thinking about this recently myself.

Just from watching our own portfolio in recent years (about $1.5 million retirement assets for the household currently) my sense is it will double much quicker than 7 years, assuming current trends continue. I know that is a big assumption, but if it happens I may be checking out of work a year or two early :happy
jaqenhghar
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Re: Did Your Money Really Double Every 7 Years?

Post by jaqenhghar »

Very interesting question, OP, and I have appreciated reading everyone's responses as well.
one_speed
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Re: Did Your Money Really Double Every 7 Years?

Post by one_speed »

I have a rollover IRA from old job, makes it easier to track. No new contributions.
2014: $189k
2024 (May): $449k

(449/189) = 2.376

2.376^(1/10) = 1.09

So yeah, 9% a year when smoothed over a ten year span.

Yippee!

EDIT: but, Inflation
https://data.bls.gov/cgi-bin/cpicalc.pl ... ar2=202403

Adjusting for Inflation, it is more like
$449k / $250k ( in 2024 dollars) = 1.796

1.796^(1/10) = 1.06
6% Inflation adjusted returns
1.06^7 = only a 'measly' 1.5x gain rather than Doubling, once Inflation takes its toll.
iln1980
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Re: Did Your Money Really Double Every 7 Years?

Post by iln1980 »

I started my job as an RN in 2001 at the age of 20 and have kept track to some degree since 2002. This is wealth excluding my bank accounts early on and does not include my house at all.
End of 2002: $2910
2003: $7629
2004: $12,651
2005: $17,256
2006: $23,584
2007: $18k
(didn't have all the records)
2015 (adding in all accounts going forward including cash): $205k
2016: $234k
2017: $312k
2018: $323k
2019: $420k
2020: $510k
2021: $663K
2022: $582k
2023: $795k

This includes contributions as well, of course. Also kind of interesting: I've contributed nearly $97k to my Roth since it's inception in 2007. It's currently worth over $211k....so over half is growth. I imagine that will only go up over time. Not sure if my data is helpful or not. But here it is just in case.
tesuzuki2002
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Re: Did Your Money Really Double Every 7 Years?

Post by tesuzuki2002 »

I think you need to apply other considerations as tax drag as well as knowing that in 30 years... $35 million will spend like $15M due to inflation and other factors, so right there that is enlightening.

do you plan to just leave the $1M sit for 35 years. I'm planning to retire will before 70 so I'm not sure why I would let it sit in an account for that long.
SchruteB&B
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Re: Did Your Money Really Double Every 7 Years?

Post by SchruteB&B »

I had a small pension rolled over into 100% VTSAX IRA in 2000. it took until 2014 to double.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

tesuzuki2002 wrote: Tue May 14, 2024 6:05 pm I think you need to apply other considerations as tax drag as well as knowing that in 30 years... $35 million will spend like $15M due to inflation and other factors, so right there that is enlightening.

do you plan to just leave the $1M sit for 35 years. I'm planning to retire will before 70 so I'm not sure why I would let it sit in an account for that long.
No, I plan to keep adding to the million, and withdraw during retirement. It was just kind of a hypothetical question and something I was curious about from others.
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oilrig
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Re: Did Your Money Really Double Every 7 Years?

Post by oilrig »

jaqenhghar wrote: Tue May 14, 2024 4:06 pm Very interesting question, OP, and I have appreciated reading everyone's responses as well.
Thanks! Yea, I wasnt sure how people would take the question. Ive never really it seen asked on here in that way before. Ive enjoyed reading the responses as well.
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simplesimon
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Re: Did Your Money Really Double Every 7 Years?

Post by simplesimon »

oilrig wrote: Tue May 14, 2024 7:35 pm
tesuzuki2002 wrote: Tue May 14, 2024 6:05 pm I think you need to apply other considerations as tax drag as well as knowing that in 30 years... $35 million will spend like $15M due to inflation and other factors, so right there that is enlightening.

do you plan to just leave the $1M sit for 35 years. I'm planning to retire will before 70 so I'm not sure why I would let it sit in an account for that long.
No, I plan to keep adding to the million, and withdraw during retirement. It was just kind of a hypothetical question and something I was curious about from others.
Warren Buffet's probably the easiest example to point to to show the power of compounding. Over 80% of his current wealth came after age 65. Google searching tells me his net worth grew from $17B to $109B between ages 66 to 92, a pretty average 7% annual growth rate over 26 years. I won't complicate the math by including all cash flows as the point remains the same.
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