Today (Jun 30, 2023) I decided to “invest” $1K every month at the end of month in the online savings account. which was suggested in my article, “The 5-Year-Investment-Plan Is A Template: How To Actually Invest It?“, Jun 15, 2023.
My new Goldman Sachs Bank’s online savings account is a proxy of the “5 YIP”. Table 1, 2, 3, 4, and 5 are actual “5 YIP” so, readers can reconcile your proxy accounts with these Tables.
To parallel the approach of “Investment Pancake”, the new “5-Year-Investment Plan” numerical illustration made the dividend reinvested. The annual interest rates are assumed to be anywhere between 4% and 2%. The investment period is 5 years, and would extend 5 years several times after the initial 5 years.
The dividend annual yield is 1.58%, according to the Touch #3: “Top S&P 500 Index Funs”, by Matthew Johnston, updated on Feb 15, 2023 Investopedia (From “The S&P 500 Index: Are We All The Blind?“, Jun 26, 2023)…
The numerical illustration of “5 YIP”, dividend re-invested, with 5 Tables are the next installment duo to space limitation.”
All assumptions were made in the previous article, which was influenced by two articles, written by Investment Pancake. I wanted to make 5 Tables of the “5 YIP’ to cover 30 years, starting at a fictitious age 14 years old, and ending at his age 44.
Making 5 Tables and at the same time writing “The Elephant (SPY) Did Stand”, which became long enough to submit.
This article focuses on a new version of the “5 YIP’ with SPY and dividend reinvested, as readers expect.
Table 1: 12 months in 2023
The investor (14 years old, we call him “Y14”) decided to buy SPY ($443.28 on Jun 30) with $1k each month for 12 months. He can buy 2 shares. At Charles Schwab (which allows to buy a fractional share) he can buy 2.25 shares.
SPY pays dividends every three months, and the last ex-dividend date was Jun 16, 2023. For simplicity, Only, an annual dividend yield (1.58%) enters every year in the 5 Tables.
Interest rates, 4%, 3%, and 2% reflect a 5-years interest trend in my view. The last row, TOTAL, shows Y14’s investment money (12K) and the interest gains, $222.46, $166.38, and $110.61 on 4% (the third column), 3% (the middle column), and 2% (the first column), respectively.
Whenever you deal with any similar tables like Table 1, I give you an advice to verify the accuracy: We have 12 investments with different investment timeframes. An average is about 5.5 months. So, $5,500 times 3% (0.03) is 165 which is close to $166 in Table 1.
Do you see the sensitivity of interests, resulting in the gain differences for just 12 months (actually 5.5 months)? Imagine how much differences there are in 5 years, 10 years, 20 years, or 30 years. You feel clearly the vehement power of compounding in the long haul. Therefore, do your diligent shop around to find a bit higher, for example, 0.001% higher
From now on, the middle column, 3%, acts as a representative for three columns.
Table 1. Investment Pack #5 [IP #5] (Age 14)
1965
2% Monthly
3% Monthly
4% Monthly
Month
Compounded
Compounded
Compounded
Jan
$1,000.00
$1,000.00
$1,000.00
Feb
$2,001.67
$2,002.50
$2,003.33
Mar
$3,005.00
$3,007.51
$3,010.01
Apr
$4,010.01
$4,015.03
$4,020.04
May
$5,016.69
$5,025.06
$5,033.44
Jun
$6,025.06
$6,037.63
$6,050.22
Jul
$7,035.10
$7,052.72
$7,070.39
Aug
$8,046.82
$8,070.35
$8,093.96
Sep
$9,060.23
$9,090.53
$9,120.94
Oct
$10,075.33
$10,113.25
$10,151.34
Nov
$11,092.13
$11,138.54
$11,185.18
Dec
$12,110.61
$12,166.38
$12,222.46
NOTE: The Table is designed by Author
Table 2: 5 Investment Packs [IPs} from 2023 to 2027
In 2017 Y14’s Investment Capital (IC) is $66,618.57 which consisted of his invested money 60K and capital gain 6.6K (11%). For five years his IC has been accumulated.
Y14’IC goes into the performance period, without adding his investing money: How long? Your age is the primary factor to decide.
Note that these five Tables are the standard for all age cohorts and the different sizes of their ICs.
Table 2. 5 IPs (IP #5 TO IP #1) (Age 14 to 19)
YEAR
2% Annually
3% Annually
3% Annually
IP #
2023
$12,110.61
$12,166.38
$12,222.46
IP #5
2024
$12,541.75
$12,721.17
$12,902.03
IP #4
2025
$12,988.23
$13,301.25
$13,619.38
IP #3
2026
$13,450.62
$13,907.79
$14,376.62
IP #2
2027
$13,929.46
$14,541.98
$15,175.96
IP #1
TOTAL
$65,020.66
$66,638.57
$68,296.45
TOTAL
NOTE: The Table is designed by Author.
Table 3: 15 Years for performance Period From 2027 To 2042
The Table recommends that 15 years are long enough to maximize the performance of investors’ ICs if their ages are younger than 50. It really depends upon other factors such as capital sizes or the personal level of tolerance.
Table 3. 5 IPs (IP #5 TO IP #1) (Age 19 to 34)
YEAR
2% Annually
3% Annually
4% Annually
AGE
2027
$65,020.65
$66,638.57
$68,296.45
19
2028
$67,335.39
$69,677.29
$72,093.73
20
2029
$69,732.52
$72,854.57
$76,102.14
21
2030
$72,215.00
$76,176.74
$80,333.42
22
2031
$74,785.86
$79,650.40
$84,799.96
23
2032
$77,448.23
$83,282.46
$89,514.84
24
2033
$80,205.39
$87,080.14
$94,491.86
25
2034
$83,060.70
$91,050.99
$99,745.61
26
2035
$86,017.66
$95,202.92
$105,291.47
27
2036
$89,079.89
$99,544.17
$111,145.67
28
2037
$92,251.14
$104,083.39
$117,325.37
29
2038
$95,535.28
$108,829.59
$123,848.66
30
2039
$98,936.33
$113,792.22
$130,734.65
31
2040
$102,458.47
$118,981.14
$138,003.50
32
2041
$106,105.99
$124,406.68
$145,676.49
33
2042
$109,883.36
$130,079.63
$153,776.10
34
NOTE: The Table is designed by Author.
Table 4 and Table 5: 5 years or 10 years more on the Performance (Optional).
In general, nonetheless, any investor who started at least at their ages 35 would consider another “5 YIP” once (Table 4), reaching their age 60, or twice (Table 5) age 65.
Table 4. 5 IPs (IP #5 TO IP #1) (Age 44 to 49)
YEAR
2% Annually
3% Annually
4% Annually
AGE
2042
$109,883.36
$130,079.63
$151,776.10
44
2043
$113,795.21
$136,011.26
$160,214.85
45
2044
$117,846.32
$142,213.37
$169,122.80
46
2045
$122,041.65
$148,698.30
$178,526.02
47
2046
$126,386.33
$155,478.95
$188,452.07
48
2047
$130,885.68
$162,568.79
$198,930.01
49
NOTE: The Table is designed by Author.
Table 5. 5 IPs (IP #5 TO IP #1) (Age 49 to 54)
YEAR
2% Annually
3% Annually
4% Annually
AGE
2047
$130,885.68
$162,568.79
$198,930.01
49
2048
$135,545.21
$169,981.93
$209,990.52
50
2049
$140,370.62
$177,733.10
$221,665.99
51
2050
$145,367.81
$185,837.73
$233,990.62
52
2051
$150,542.91
$194,311.93
$247,000.50
53
2052
$155,902.24
$203,172.56
$260,733.73
54
NOTE: The Table is designed by Author.
The Market Perspective in Five Years
I am bullish this year, considering the resilient U.S. economy, led by the innovative AI sector, and more cooperative global governments’ policy of China, Japan, and other G-20 countries.
In the three-to-five-years spectrum, we will have either a garden-variety recession or the current Great Expansion, starting in 2009, will continue until 2027 or so.
The Charles Schwab reported the market and the economy on Jun 30, 2023:
The last day of the second quarter ended with a punctuation point on what marked the best first half of the year for the Nasdaq Composite (+31.7%) since 1983!Mega-cap stocks took the lead at the open, held it throughout the day, and joined with a host of other stocks to finish the week and the quarter on a winning note.
The tone for today’s winning session was set early when Citigroup started coverage of Apple (AAPL 193.97, +4.38, +2.3%) with a Buy rating and $240 price target. Apple surpassed a $3 trillion market capitalization today. Not to be outdone, Daiwa Securities upgraded NVIDIA (NVDA 423.02, +14.80, +3.6%) to Outperform from Neutral. Those research calls put a bid in the mega-cap stocks that strengthened following the release of the Personal Income and Spending Report for May.
That report played into the optimistic view that the U.S. economy could in fact avoid a recession. It wasn’t because the report was undeniably strong; rather, it was more because it wasn’t decidedly weak. Personal income increased 0.4%, personal spending jumped 0.1%, the PCE Price Index rose 0.1%, and the core-PCE Price Index, which excludes food and energy, advanced 0.3%.”. (The italics are my emphases.)
Concluding Remarks
Leading by SPY (Elephant), the market will move into a Bull Plateau which all Bulls patiently have waited for three years and four months.
For the last two weeks from Jun 20 (Tuesday) to Jun 30 (Friday) we, Bulls, have constructed and paved a Bull highway. Although we are still cautious, expecting suburban and mean Bear attacks, a favorable settlement would be not far away.
The revised numerical illustration of the “5 YIP” with SPY, dividend-reinvested directs all long-term investors, giving them the detailed and core information.
Y14’s Investment Capital will be 83.3K in 1932, (at age 34), $130.1K in 2042, (at age 44), and $203.2K in 2052, (at age 54).
In these 40 years, inflation and interest rates are expected to be 2%. According to the “72 Rule”, the real money will take 36 years (72/2).
As a result, Y14 will have his Real (inflation adjusted) Investment Capital which is roughly $102K (=203.2/2) in the 2023 dollar, which is almost double of his investing money, $60K.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.