Value of One Dollar 1925 - 1999

If it was possible to invest one dollar, $1.00, on January 1, 1925, in either the small cap stock index, large cap stock index, long term bonds, or short term bonds how much would it be worth? Obviously, it is not possible to invest just $1.00 and this is given to illustrate which investment gives the best long term growth. This data comes from the book titled Investments by Bodie, Kane, & Marcus.

Seventy five, 75, years later on December 31, 1999 here is how the numbers come out:

Due to inflation: $9.40 on December 31, 1999 is equal to $1.00 on January 1, 1925. This is needed to calibrate the results of these four investments.

Short term bonds beat inflation slightly and equals $15.41.

Long term bonds did better than short term bonds and equals $38.58.

The large cap stock index, S&P 500, had a value of $2,481.87

The small cap stock index, Russell 2000, had a value of $6,382.63.

A couple of points:

1. Saving just $1.00 when invested for the long term can make a difference.
2. Long terms investments get better growth with stocks than bonds.
3. Bonds do a better job of stability rather than growth.