10 crazy and surprising financial facts (Part 1)

A lot of people are surprised by the facts on personal finance. Here are a selection of facts you may find surprising:

1. From 1802 to 2005, a dollar invested in the U.S. stock market would have grown to $10.3 million, including reinvested dividends. From 1802 to 2005, a dollar invested in Gold rose to $27, and it doesn’t pay any dividends.
2. The US Markets vs Housing in the US or UK. Housing in the US and UK have consistently failed to beat markets. Even hot markets like London haven’t managed it. According to the Land Registry in the UK (http://landregistry.data.gov.uk/), the average property was 55,000 Sterling in 1995 and is now at 225,000 Sterling in 2018, representing a 309% increase. Even if we don’t factor in the costs of up-keeping the house, which can be huge, the returns are poor compared to markets. In early 1995, the Dow Jones was sitting at $3,900and was sitting at $26,616 in 2018, representing a rise of more than 6.5X.
3. Markets vs businesses. In 1900, there was approximately 4,000 people with $1M or more. If each of those people had invested in an S&P index fund and their children/grandkids had done the same, they would all have about $80billion or more today.
4. Even more interestingly, assuming that each of these 4,000 all have 2–3 kids and numerous grandkids, researchers have worked out there could be 120,000 billionaires in the US today. There are only 500–600. And almost all those 500–600 are new billionaires, not through inheritance. Not so easy to beat the markets with businesses after all
5. Volatility and stability are inversely linked. Assets which are more volatile aren’t always less safe. Government bonds are less volatile than markets, but have consistently underperformed. The Nasdaq has been much more volatile than both the Dow and S&P. However, it has produced over 12% from 1995 until today, which is higher than the S&P’s 10%-10.5% yearly average.

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Adam Fayed — International AMG — adamfayed@iamgltd.com