From $1 to $3 Million. The Power of Long-Term Investing

One dollar invested in US stocks in 1802 is worth almost $3 million today, after inflation.
The same dollar kept in cash is worth less than 4 cents.

These numbers come from Professor Jeremy Siegel’s book “Stocks for the Long Run“. All returns are real: inflation is already taken out, so they show how much your buying power really grew.

The gap between 6.9% and 3.3% looks small. But over 220 years, compounding turns it into a huge difference: stocks grew more than 2,000 times as much as bonds!

When you buy stocks, you become a part-owner of real companies that make profits. The simplest way to own them is through a low-cost global index ETF (we’ll explain why in a future article).

Be careful, though: the chart uses a log scale, which makes growth look smooth. In reality there were huge crashes, like in 1929 and 2008.

Bonds earned about half as much as stocks, but they move much less. Their job is to make your portfolio more stable.