Do the Math

June 25, 2010

I’ve been watching CNBC (the stock market pundits) for a long time now, hoping to find a way to get some kind of return on my retirement investments.  I do have U.S Social Security, which I became eligible for at age 62 and that is quite enough to live on in Thailand.  But having a little more income from investments might make things a bit less “living on the edge”.

Since most of us retirees are in the same boat, I thought I would look a little more closely at how our investments in the stock market have been doing.

I’m not that good at math but I think I have learned how to do the numbers.  And they aren’t pretty.  I am going to bet that the majority of people who have at least part of their retirement funds invested in the stock market don’t know the following fact.  For the last decade, from June 19, 2000 to June 19, 2010, the DOW is down 107 points.  That’s right.  On June 19, 2000 the DOW stood at 10,557.  As of June 19, 2010 the DOW was at 10,450.  Sounds pretty sad.  But if you do the numbers, the reality is much sadder. (Note: As I post this the numbers are even worse.)

Those pundits on CNBC who have been telling us for the last decade what stocks to buy, how we are now in a “bull Market”, how it’s the time to buy, how things are looking up for all us investors, have been blowing smoke.  Since many of their sponsors are investment companies, which make money whether your stocks go up or go down, just as long as you are buying and selling, it’s no wonder we aren’t getting all the facts.  So I thought it best to take all of CNBC’s advice with a ton of salt and do the math myself.  Here is what I came up with.

In order to see things more clearly let’s say that back in the year 2000 we invested one dollar in each of the averages, the S&P, the Nasdaq, and the DOW (ex. the DOW was at 10,557 so we invested $10,557 in the DOW, etc).  You would have had a total of $15,932 invested back then.  Today, even though we have seen a steep rise in the markets this last year, our initial investment would have turned into $13,876.  Look at the table below to see the break down.

June 19, 2000 June 19, 2010 Difference
S&P $1,486 $1,117 -$369
Nasdaq $3,889 $2,309 -$1,580
Dow $10,557 $10,450 -$107
———– ———– ———–
Totals $15,932 $13,876 -$2,056

For arguments sake I am taking the paltry dividends that the average stock is returning and using it to pay for our investment fees.  It makes seeing the numbers easier.

Upon first look it would appear that our initial investment has taken a loss of $2,056.  Pretty bad, right?  That’s only part of the story.

Over the last decade the inflation average has been 2.7%.  This is quite low historically so we have been pretty lucky.  But apply this to our current investment and you’re not going to feel too great about it.

After inflation of 2.7% per year, over 10 years, the $13,876 that we have still remaining invested would buy the equivalent of only $10,553 in the year 2000 dollars.  The difference between the $15,932 invested in 2000 and the buying power of today’s remaining investment of $10,553 is the equivalent of a loss of $5,379.  That means that our current investment is down 33% from the initial year 2000 investment.  And all we did was just let the money sit there.

Where did the money go?  It would literally have been better to have left the money under our mattress.  Don’t believe me?  If we would have left the original $15,932 under our mattress, we would still have the original amount left.  After inflation it would be worth only $12,117.  But that is still about $1,500 better than our investments did.

So, for those of us who are lucky to still have money to invest, what do we do with it?  I wish I knew.  I’m still trying to get over the shock of “doing the math”.

I can’t give investment advice, it is illegal unless one is certified, which is lucky for me since if I had given you advice, considering how my own investments have done, you’d probably be coming after me with pitchforks.  But I can say that I’m being very careful about whom I am listening to and being very conservative about what money I have left.

Good luck to all of us.

New from

Since we launched about 10 days ago eBooks in Thailand has added some great reads.

Title: How to Make a Living in Paradise, by Phillip Wylie  – If you want to know how to earn enough to live on in Thailand then check this one out.

Title:  Looking for Mr. Rin, A Families Roots in Northeast Thailand, by Lawrence Whiting  –  A memoir of a foreigner and his new family in northeast Thailand.  It is also a social and cultural study of the people of Isan.

Title: The Adventurer’s Guide to Early Retirement, 3rd Edition, A Common Sense Approach, by Billy & Akaisha Kaderli  –  Want to know how to retire early?  These are the experts and they share their secrets and experiences.

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3 Responses to “Do the Math”

  1. Richard said

    If you look at the amount of Social Security most Americans get in
    the end of 2015 it is about 1850 per month. That translates into about 64,750 baht per month at the current rate of the baht. Excluding any small investments you may have. If you can,t retire on that amount of money in Chiang Mai then there really
    has to be something wrong with the way you are budgeting your
    monthly living expenses or you are eating at the Riverside
    every night and drinking a great deal of American Whiskey. I’ve been following what it cost to retire in Chiang Mai and with the
    figures I gave you you could retire anywhere in Thailand you wanted.

  2. If you look at the amount of Social Security most Americans get in
    the end of 2015 it is about 1850 per month. That translates into about 64,750 baht per month at the current rate of the baht. Excluding any small investments you may have. If you can,t retire on that amount of money in Chiang Mai then there really
    has to be something wrong with the way you are budgeting your
    monthly living expenses or you are eating at the Riverside
    every night and drinking a great deal of American Whiskey. I’ve been following what it cost to retire in Chiang Mai and with the
    figures I gave you you could retire anywhere in Thailand you wanted. $70,000 baht per month is not living on the edge in
    Chiang Mai especially if you own your own Condo and have no
    monthly rent. If you are married you can almost double those figures

    • You are right about what it takes to live here but not everyone gets $1,850 per month. I don’t. According to ssa.gov the average benefit is $1,341. Then we are cutting it close.

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