If you invested $1.50 the last time the Cubs won

The World Series starts today. Are you interested? Interest in baseball has been on the decline, but this year’s World Series pits the Cleveland Indians against the Chicago Cubs. It’s been a long, long time since either team has won the World Series. Cleveland won it 68 years ago, back in 1948. The Cubs haven’t won the World Series in 108 years! You’d have to go back to 1908 to celebrate the last Cubs series win. So what does any of this baseball history have to do with personal finance. Long periods of time reminds me of the magic of compounding.

Let’s look and see how much money your have amassed over the years. Back in 1908. A ticket to sit in the bleachers in Wrigley Field to see the Cubs win the World Series would have cost you just $1.50. If you had invested the last time the Cubs won the World Series, you probably wouldn’t be reading this right now…  Okay, let’s say your grandfather decided to pass on spending those ten bits on a ticket to a 1908 World Series game. Grandpa may have felt, “I’m going to have grandchildren who’ll need money in the future. Instead of going to see a baseball game, I’ll invest that dollar in the S&P 500. I can always go see the Cubs in the World Series some other time during my life.” Little did grandpa know, but it would have taken more than a century before the Cubs won another World Series.

So what happened to that one dollar? Over the past 108 years, the S&P 500 has averaged a 9.763% annualized return. (That includes reinvesting dividends.) That means that that $1.50 in 1908 invested in the stock market would be worth over $35,000 today. Not bad for $1.50, but what would happen if we invested $1.50 every year? That relatively insignificant $1.50 investment would be worth over $425,000 today. Now we are talking! Almost half a million dollars for just $1.50 a year. Insane, right? Compounding over time really allows your money to grow.

That $1.50 price for a World Series ticket was really quite modest. On dollar back in 1908 would be worth about $25.00 in today’s dollars. You couldn’t buy a World Series ticket in Chicago today for $37.00. The retail price on those tickets were $190.00. But since the World Series is clearly are rare occurrence in Chicago, you can get a lot more for those tickets. Seats in the bleachers, which sold for $1.50 in 1908 are selling for over $3,000 today.

 

 

 

 

Seats by the dugouts are going for $40,000. If you’re okay just standing, you can buy a standing room ticket for $2,000.

source: http://deadspin.com/5471527/cubs-scalping-own-tickets-now

source: deadspin.com

Sure, it’s nice to have the memory that you were at the game. Fifty years from now, you will be able to tell your grandchildren that you went to see the Cubs in the World Series. That’s a nice memory, but what if you invested that $2,000 instead. Fifty years from now — assuming that same 9.763% annual return, you could be giving your grandchildren well over $210,000. What if you took $2,000 out of your pocket and invested it in the S&P 500 every single year for the next 50 years. Before you tell me that you can’t afford to invest $2,000 — that’s just $167 a month — for your future, answer me this. If you can afford to shell out $2,000 to go to a baseball game, you can set aside money for your future. By the way, $2,000 invested every year, at the same rate-of-return would be worth over $2.5 million in 50 years.

 

 

 

 

 

1945:

You can pick any point in history and see similar results. 1945 was a good year. On September 2, 1945 World War II ended. A little over a month later, on October  10, 1945, the Detroit Tigers beat the Chicago Cubs to win the World Series 4 games to 3. Seats in the bleachers at Wrigley Field for the 1945 World Series were selling for $6.00. ($6.00 in 1945 is $80.48 in today’s dollars.) What if you invested $6.00 a year from 1945 til now. The S&P 500 has performed better since then. The average return over these past 71 years has been 10.866%. A six dollar one time investment in the S&P 500 in 1945 would be worth over $1,000 today. If you invested $6.00 each and every year for the past 71 years, you would have over $11,000. Still not that much. But if you could invest $6.00 a month, every month for the past 71 years, you would have over $139,000. (The average American has about $45,000 today.)

 

The more you invest and the more time you have to allow your money to grow, the more money you will have later in life.

If you invest $100 every month, your money will grow slowly at first, but will really pick up speed as the decades pass. Assuming an 8.5% annual return, a $100 monthly investment will be worth about $22,000 after ten years, almost $70,000 after ten years, over $175,000 after 20 years, and over $410,000 after 40 years. Okay, that doesn’t sound like much, but what if you were to save $300 a month — that’s just about $10 a day. You can do that right? After 40 years, a $300 monthly investment would be worth $1.25 million! Figure out how to set aside just $10 a day. After 40 years, you might be millionaire!

 

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