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THWhat level will the S&P 500 be in 30 years time?
The real answer is that it is COMPLETELY impossible to say. And using past performance, like I am here, is a terrible way of estimating future returns.
But this example helps people understand the insane power of compounding over time. If the S&P kept the same growth rate as it has for the last 50 years (10% before inflation - really unlikely), the growth would be insane.
In 1995, the S&P was around 1,000 points. Today, 30 years later, it is around 5,500 points. You might therefore think that in another 30 years time, the S&P would be at 10,000 points.
But that's not how compounding works.
It would, in this hypothetical scenario where the S&P magically kept the same growth rate, be much, much higher.
That's perhaps part of the reason people don't think such rapid growth in US equities is sustainable for another 50 years.
Definitely don't use this entirely unreliable projection to make any investment decisions! This is not financial advice, your capital is at risk. Past performance is not indicative of future growth.
#sp500 #investing
@themoneystocker
