### How Much Would Your U.S. Savings Have Grown?

This calculator computes how much an amount saved in an initial year grows, depending on the type of financial investment or asset chosen.

There are five alternative investments you can choose:

- a short-term asset (similar to a saving account at a bank)
- a long-term asset (similar to a mutual fund of corporate and government bonds)
- a bundle of corporate stocks
- to hold gold
- to own a house

**If you choose the short-term asset**, the calculator assumes that the principal investment is made in equal installments throughout the
initial year at the average short-term rate for that year. The principal plus the interest accumulated is then reinvested at the average
short-term rate for the second year. This continues until the final year, when the withdrawal is assumed to be made over equal installments
throughout that year. The short-term rate used is the interest return on treasury bills carried back in time by the interest rate on commercial paper as found at What Was the Interest Rate Then?

**If you choose the long-term asset**, the calculator assumes that the principal investment is made in equal installments throughout the
initial year at the average long-term rate for that year. The principal plus the interest accumulated is reinvested at that same rate
for the second year, and continues at that rate for the number of years of the term you have selected.
At this point, the calculator will use the long-term rate of the next year and repeat the process. This continues until the final year, when
the withdrawal is again assumed to be made over equal installments.
The long-term rate used is the interest return on corporate bonds carried back in time by the interest return on New England municipal bonds
and U.S. government securities as found at What Was the Interest Rate Then?

**If you choose the stock asset**, the calculator assumes that the principal investment is a purchase of all the stocks in the composite average
at their average price during January of the initial year. The dividends earned during the year are assumed to be reinvested at
the price of the stocks in the composite in the January of the next year.
It is assumed that you hold the portfolio until the year of withdrawal, and that you sell the stocks in the portfolio at their average price during January of that year.
It is also assumed that, during the entire period of investment, there are no commissions or taxes paid. __The stock asset used__ is the Standard and Poor's Composite Index. The data, with an explanation of how they are computed, are in The Annual Standard and Poor's Composite Stock Index, the Yield, and a "Portfolio" of the Index with Dividends Reinvested.

**If you choose gold**, the calculator assumes that the principal investment is a purchased of gold at the average price of gold for the initial year.
It is assumed that the gold is held until the year of withdrawal, and then sold at the average price of gold in that year. The gold price used is the London market price of gold found on
The Price of Gold, 1257 - Present.

**If you choose to own a home**, the calculator assumes a home (or part of a home) is bought in the initial year and sold in the year of withdrawal. During the time the home is held it is assumed that there are no modification made and that no commissions or taxes are paid.
Data on home prices are from Standard & Poor's, where there are three composite index series reported: the National, 10-City and 20-City. These series are called the Case-Shiller Home Price Indices. You can find data there for all three indexes going back to 1975. Data from before 1975 can be found in *Irrational Exuberance *by Robert Shiller [Princeton University Press 2000, Broadway Books 2001, 2nd edition, 2005]. He published this series up to the current year on his Online data. We use the annual average of that series.

The data from 1890 to 1933 are from *Capital Formation in Residential Real Estate: Trends and Prospects *by Leo Grebler, David M. Blank, and Louis Winnick, Princeton University Press, 1956. And the annual observations are found on p. 347. They are also found on the Shiller data page.

#### Citation

Samuel H. Williamson, "How Much Would Your Savings Have Grown in the United States?" MeasuringWorth, . URL http://www.measuringworth.com/ussave/

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