By pulling out this one example you are misrepresenting his whole strategy for getting out of debt and saving consistently for retirement. so continue to dollar cost average. a. Let’s look at the performance of $10.000 in Vanguards VTI Fund – this is a broad market index fund, investing in over 3,000 shares that make up the US Stock market. I actually picked up on this article from another finance blogger who was citing it as gospel. This preview shows page 1 - 2 out of 5 pages. Still, at no time during the crisis and recovery did Arthur have a larger balance than Ben. Sources: The saving habits of Ben and Arthur (video) best illustrate which principle of saving? And of course these numbers (both yours and mine) treat the investments as lump sums on Jan 1 of each year. I think one of the biggest problems we face in taking charge of our Personal Finances is being able to see through the soundbites and marketing gimmicks and get to the truth of the matter for savings. I can still see value in ‘being wrong’ yet doing right, but I would prefer both to align. Incidentally, that year was 1979 and if you were invested in the Dow Jones Index you would have seen growth of about 5.5% or with inflation a ‘real loss’ of about 8% that year…. Required fields are marked *. I discovered that Ben’s investments outperformed Arthur if he started in any year going back to 1974. Don’t stop investing (of course!!) http://www.bogleheads.org/wiki/S%26P_500_index, http://www.forecast-chart.com/historical-dow-industrial.html. They call the kids in the example Ben and Arthur respectively. *Indeed in 2008, I would have lost nearly the equivalent of my entire initial Ben investment (-$15,495) but would still have a balance of $30,349. As such, my recommendation would be to not use Ben and Arthur to explain compound interest, find a different example that factors in the other important subject of Standard Deviation OR keep it simple, and only talk about compounding in a fixed interest environment. This accounts for years such as 2008 when everything went to hell. Comparatively, as an Arthur investor I would have lost less than half of my initial investment to that point ($18,000 invested / -$7,497 in 2008 losses). Your ability to take things out of context and then spin them to fit the title of your article is second to none. Your email address will not be published. However, when we look forward a little into the future we see where the problem lies with not adding more. Matt, thanks for doing this analysis. Your analysis is absolutely correct. And by Dollar Cost Averaging, an Arthur investor would be back above the 2007 highs in less than 2 years compared to a Ben investor taking 4 years to recover. The problem is this. This seems like a pretty good mid-term comparison as it is near the half-way point of the plan. But I have to echo what Jennifer wrote. Incidentally that actual ‘average rate of return on the Down during this 18 year period was 8.49% though you should consider that number is not what you would earn in any fund as they take a cut of the pie as a management fee. Pay off all debt (except the house) using the debt snowball. We cannot put all the blame on others though – it is up to us, the individual to scrutinize the data, and learn the truth. From 1926-1930 and from 1959-1967. That is, if you turned 19 in 1974 or any year since then and acted as a Ben investor, you came out ahead of Arthur up through 2013. c. The length of time money is invested matters. I just read a post from Dave Ramsey, well known Personal Finance expert and was surprised at the lack of thought in the theory displayed. It’s not a retirement investment strategy and he makes that quite clear in his teachings. He writes here on Travel and Finance related topics, and is always happy to help with specific questions in the comment section of this site, follow him on Twitter. a. Official Lyric Video for Ben\u0026Ben's latest single, \"Masyado Pang Maaga\".MASYADO PANG MAAGA LYRICS____Bakit ba ang hirap-hirapMagsabi ng deretsahan?Di pagkakaunawaanPwede sanang pag-usapanTahanPwede pa bang malamanLaman ng iyong isipan?Para walang maling akalaParang kay bilisNg iyong pag-alisTeka lang, teka lang, teka lang munaSan nagkamali?Pwede bang bumawi?Teka lang, teka lang, teka lang munaMasyado pang maagaAno ba ang iyong hinahanap?Nasakin ba ang kasagutan?Pa'no natin malalamanKung laging nagsisisihan? Here is the post in full How Teens Can Become Millionaires. DST in the US. Ben Arthur SCAMMELL. By doing this you are not buying on the ‘dips’ and that means you are like a boat bobbing along on the waves, when it goes low you ride it out, and when it goes high again, you don’t gain anything other than getting back to where you were before. Front. DJIA returns 2013: http://www.cnbc.com/id/101303244. It’s as simple as that, friend. The Value of money is change by time and inflation. Inflation reduces the value of your dollar/pound/peso, so for every Percentage Point you seek in growth and appreciation you have to first balance out the inflation number then find your ‘Real Rate of Interest’ The Federal Government aims to keep inflation at around 2%, however there have been instances in the past 40 years where it has been as high as 13.3% if you are earning 12% and inflation is 13.3% then you are actually losing money every year.

Organizations That Help Families In Need Near Me, Grid Design Website, Gynecology And Obstetrics Department, Brely Evans Ambitions, Historically In A Sentence, How To Pronounce Glue,