Category: Stimulus Check Experiment

Wow. What a year. Exactly 12 months ago this Wednesday, I invested $1,000 into an S&P 500 index fund (Ticker symbol VOO). We were a month into feeling the widespread effects of the COVID-19 pandemic, and the stock market had suffered its worst decline in 10 years. No one knew what was going on, or what the next year would bring.

While it was the first pandemic most of us had seen, it wasn’t the first time the stock market had taken a nosedive – we saw a very similar story play out in 2008. As I outlined in my post a year ago, if you had invested in the stock market in 2008 when it felt like the world was ending, you would have made a lot of money (nearly quadrupled your investment by 2021).

So when stocks were crashing and it felt like the world was ending in March/April 2020, I saw it as a great opportunity to invest. And the government even sent me some extra money (thanks government my fellow taxpayers!).

I purchased $1,000 worth of VOO on April 21, 2020. Exactly one year later, that $1,000 I invested is now worth $1,541, representing a 54% return.

54% in a year. That is wild compared to the stock market’s average return of ~7% a year for the last hundred years or so. I was kinda hoping that stocks would continue to decline so I would have a good story about sticking out the ups and downs and holding on for the long term. But I’m sure that day when we hit another big downturn will come eventually (maybe one year from now? 5 years? who knows!).

For now, I’ll just pat last-year Greg on the back, and remind you again… when the stock market drops, that is a great time to buy. As Warren Buffett, arguably the greatest investor ever, says, “Be fearful when others are greedy, be greedy when others are fearful.”

I’ll leave you with a fun hypothetical. Let’s say I kept that $1,000 invested for the next 40 years, and it continued to increase by 54% each year. By the time I was 65, it would be worth roughly $31,000,000. I give that a 0.00% chance of happening, but it just illustrates how high of a return that is in a year.

As always, if you are interested in chatting about anything personal finance related, or you just want to say hello, feel free to reach out to me at hashtagmoneygoals@gmail.com.

Previous installments of the Stimulus Check Experiment:

What I’m Doing with My Stimulus Check – April 2020

Stimulus Check Update #1: My First Dividend! – July 2020

#MoneyGoals

It’s not lookin’ good for those of you who took me up on the bet of a Chipotle burrito in 2030 if my $1,000 I invested was worth more than $2,000. After buying 4 shares of VOO (Vanguard’s ETF that tracks the S&P 500) in April, the stock market went bananas. My $1k has grown to be worth $1,152.98 – up over 15% in a little over two months.

To give you some perspective on how ridiculous this is, let’s say it keeps growing at that rate for the next few years. At roughly 72% growth per year ( (15% / 2.5 months) x 12 months in a year)), my $1,000 would grow to be almost $2,000,000 by 2034… if that happens, I’ll buy everyone who bet me a burrito a Ferrari (sadly, it’s not going to happen, sorry Jyothi).

That said, it does highlight the importance of investing consistently and not selling your investments when the market goes down. Also, if you have any spare cash laying around, the opportunity to buy more stocks in a once-every-10-years market downturn like March 2020 could lead to massive benefits in the future. Hopefully, we will continue to see them as we track this particular $1,000 investment.

Included in that $151 my money has made over the last 2ish months is my first dividend of $5.73 which I received July 2, 2020 (pictured above). This is especially exciting because that dividend is automatically reinvested, so I now have 4.02 shares of VOO instead of 4.00. That extra 0.02 shares will grow and produce dividends of its own, and I’ll be making interest on my interest for years to come. I’m pumped to write a blog post a few years in the future showing how much the dividends have grown.

As I mentioned in the last post, feel free to follow along by investing yourself and watching your own money grow in the coming years! It’s still a great time to invest, and you may have more free time now to get an investment account started if you haven’t already. If you have any questions or if I can be helpful in any way, go ahead and email me at hashtagmoneygoals@gmail.com.

Take care y’all! #MoneyGoals

I’ve had this idea for a while, but haven’t gotten around to actually doing it – to invest $1,000 while I’m young and track its ups and downs for the rest of my life.

Then the government (read: you and I as U.S. taxpayers) decided to send me some money to inject into the economy and help us all get back to somewhat normal during a global pandemic. What better way to put that money to work than to invest in American businesses?

Into the brokerage account it went. If I weren’t tracking this investment, I would have bought a few shares of my go-to index fund, in which the vast majority of my net worth is invested, the Vanguard Total Stock Market ETF (Ticker symbol: VTI). But then the dividends would get mixed in with the dividends of my previously purchased shares and would be difficult to calculate the exact return.

So I decided to invest in a very similar index fund, the S&P 500, which is a collection of the 500 of the biggest companies in the United States (you can see the entire list here). Vanguard’s S&P 500 fund has the ticker symbol VOO, and was trading at ~$250 per share earlier this week. I was able to buy 4 shares at $250.00 apiece, so invested exactly $1,000.00 as pictured above on April 21, 2020.

I will keep you updated on my $1,000 investment over time, checking in every now and then to see how much money I’m making or losing at any given time. If you would like to follow along on your own, you can just type “VOO” into Google (or click this link) and see how much one share is worth at that exact moment. As of the market close Friday, one share was worth $260.14, meaning my investment has increased by $40 already ($260.14 x 4 shares = $1,040.56).

Better yet, feel free to follow along by investing yourself and watching your money grow in the coming years! Now is a great time to do it, and if you need any assistance getting started I’m happy to help. Feel free to send me an email at hashtagmoneygoals@gmail.com.

Stay tuned.

#MoneyGoals

 

Pictured: The actual purchase of my 4 shares of VOO on April 21, 2020.

Some additional thoughts if you are starving for more content while in quarantine:

I’m planning on holding on to these 4 shares of VOO for the rest of my life. Assuming my $1,000 grows 7% each year (which is about the stock market’s average), it should be worth the below amounts each decade. I’ll check in many times before then, but we’ll see if I double my money in the next 10 years. I will bet anybody a Chipotle burrito that it will be worth more than $2,000 by April 21, 2030 😉

• 2020: $1,000
• 2030: $1,967
• 2040: $3,869
• 2050: $7,612
• 2060: $14,974
• 2070: $29,457
• 2080: $57,946
• 2090: $113,989
• 2100: $224,234

The reason why I would take that bet, and the reason why I say it’s a great time to start/continue investing is that 1) the stock market is down and we are either in, or on the brink of, a recession. This is the best time to buy stocks and make investments because prices are low (think of buying an apple tree that typically costs $100 and produces $7 each year in apples for 30% off) and 2) because recessions are typically followed by periods of strong economic growth.

For example, if you would have purchased $1,000 of VOO 10 years ago on April 21, 2010 as we were coming out of the housing market crash and Great Recession, it would be worth ~$2,900 today. Almost tripling your hypothetical investment in 10 years, and easily surpassing the estimated returns for the coming decades I have above. Get out there and invest y’all!

Related Reading:

What You Should Do When the Stock Market is Falling

Coronavirus and Control

WTF is a 401(k)?