The Boring Newsletter, 4/16/2023 🌿

Hello Friendos,

I do a little container gardening here in Brooklyn. Last weekend I planted my seeds so now I am in waiting mode to see if it all germinates. Some seeds only take 5 days. Some a week or two. If my strawberry seeds take, it could be 45 days. Maybe some birds snuck off with my seeds and my dirt will just stay dirt. I just have to wait and see.

I started investing in fall of 2000, after I got my first full time job. This is a chart of the S&P 500 since September of 2000 (the blue line):

The tan line is set to the starting level in September 2000. I invested into the market with part of every paycheck and for YEARS I would have been better off leaving it under my mattress. Things started to get some traction by 2006 and then we had the financial crisis. For over a decade my investments basically did nothing, but I was accumulating shares (of index mutual funds).

Each share I owned got the benefit of great returns this last decade.

I made an example for you of someone who starts out saving $300/month in September 2000 and invests in an S&P 500 index fund. They increase that by 2.5% each year (they get a cost of living raise each January). Here is what their cumulative saving (the green line) and investment account value (the orange line) look like:

For all those beginning years, the value of the investment account mostly is just what they saved into it. Interestingly, even after the last great decade, it’s only in the most recent years that the value from investment returns exceeds the value from saving into the account (it’s now about a 60%/40% split, investments/$ saved into the account).

The stock market is not a good match for every investment time horizon. You must be willing (emotionally) and able (financially) to ride the roller coaster for many years. My house fund down payment money sat in a money market fund for years, which was very boring and never earned much interest but it also never went down in value.