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intercst wrote If you look at the 128 rolling 30-year periods between 1871 and 2000 for an investment in the S&P500, more than 80% of those 30-year periods had an annualized, inflation-adjusted return of more than 5%.

http://www.retireearlyhomepage.com/ireturn.html


I am not going to dispute the data - data for the early years must be very different. The idea one can expect to obtain 5% over inflation with the S&P is problematic based on S&P closings and inflation data.

From Yahoo.com I found the S&P500 in January 1950 to be 17.05. Adjusted for splits the value in December 2010 in 1250. Call it 60 years.

1250/17.05 = 73.78 which for 60 periods is 7.42% compound growth.

I cannot prove this site is accurate (http://www.usinflationcalculator.com/), but plugging in $20 for 1950 gets $181.58 today. Call it 60 years.

$181.58/$20.00 = 9.079 which for 60 periods is 3.74% annual growth.

So using the whole 1950 to 2010 period 7.42% - 3.74% = 3.50% or well below 5%.

I would not be surprised if several 30 year periods between 1950 and 2010 had 5% real returns, but it is impossible for 80% to have such returns without periods of dramatic disinflation - and that has not happened.

Gordon
Atlanta
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