Saving And Investing Are Not Pointless

Today I want to discuss an article I found back in June 2022. The article discusses a study, conducted by Fidelity, about how “next-gen” savers (between the ages of 18-35) aren’t saving anything because of post-Covid uncertainty and recent poor stock market performance.

I’m writing this because I wish somebody would have written this article back in 1976, back when I turned 18.

The stock market was just emerging from a prolonged bear market that had lasted from 1973-1975. My dad worked in an auto factory and I remember him being laid off a lot during that era (on a side note, he was thankfully a member of the United Auto Workers union, and between the money they paid him and the lessons in frugality he learned growing up during the 1930s depression, we did OK).

The price of the S&P 500 on January 1, 1977 was 103.80, which was pretty near the high for the decade of the 1970s (I use the S&P 500 because that’s where I keep most of my investments – I’ll write an article about why I do that someday – and it’s where other market activities take place). Market prices pretty much went sideways for the entire decade. (Source:

Now let’s say I had an extra $1,038 sitting around back then and bought 10 shares of an S&P index fund at that price. What would they be worth now?

Yesterday’s closing price for the S&P 500 index was 4,450.91. Those 10 shares would be worth $44,509.10 today.

That almost a 44x return on your investment for basically just holding onto shares in a mutual fund.

And if you run those numbers through an inflation calculator (like the BLS’s CPI calculator at

  • $1,038 in January 1977 has the same buying power as $5,396.30 has today (May 2023; June figures won’t be released until next month).
  • $37,905.50 has the same buying power as $8,561.50 did in January 1977.

So in terms of real buying power, that money would have grown more than 8x over the past 50 years, after inflation, and you’d have a lot more buying power.

What’s going to happen over the next 50 years? I don’t know and I don’t know if I’ll be around to find out.

But I do think that now is the time to save.

I like to play around with spreadsheets, and I created a couple of quick ones to just run some numbers.

In the first one, I wanted to see what would happen to my money if I invested $1,000 a year in the S&P 500, starting on January 1, 1977. I chose that year because it’s the year I got my first full-time job.

In this instance, a deposit of $47,000 (over time – and granted, $1,000 was worth a lot more in January 1977 than it was in January 2023) would result in my having $553,050.23 as of the day I’m writing this post (June 30, 2023).

That’s more than 10x growth during that time.

You can see this spreadsheet at

The second one is pretty easy. The S&P 500 hit an all-time high price of 4,804.51 on January 4, 2022. Let’s say you bought $4,804.51 worth of the S&P 500 back in January 1977 at the price I mentioned earlier (103.8). How much would you have now?

  • $4,804.51 / 103.8 = 46.286 shares (assuming you bought the SPY, which is the S&P 500’s Exchange Traded Fund, or ETF).
  • 46.286 * 4804.51 = $222,381.55

My point here? I think it’s better to save over time than it is to just buy once and hold.

Now let’s apply it to the retiree. Granted, retirement isn’t the best time to try to accumulate, at least in a savings or investment account. But it can be a good way to supplement your current retirement income if you have some savings.

Yes, there is risk when you invest your money in the stock market and doing so may not make sense for everybody. But once the “official” inflation rates subsides and you’re back to earning less than 1% in a traditional savings account, you may want to consider puttingĀ most of your savings into an investment account so you get something from it.

Future articles will talk about various strategies you can use to help mitigate the risks associated with investing your savings, particularly later in life, but just off the top of my head, here’s what I’m going to do (and keep in mind that I don’t yet consider myself to be “retired” – in spite of the Medicare card in my wallet):

  • Keep the bulk of my savings in an S&P 500 index fund. In my case, it’s in a Roth IRA so I can withdraw it tax- and penalty-free (I’ve had a Roth IRA for more than 5 years so there are no penalties).
  • Keep enough cash on hand to pay for 2-3 years of expenses (in other words, the stuff I have to buy to stay alive).
  • If the stock market is up in a given year, use up to half of that money to replenish the “cash on hand” account during the first week of January in the following year (so that it covers 2-3 years of expenses – and don’t forget to factor in inflation) and keep the rest in the index fund.
  • If the stock market is down in a given year, I don’t replenish the cash on hand fund.
  • If half of the previous year’s growth isn’t enough to replenish the cash on hand fund, I only take 50% of the growth.

I think it’s pretty clear that while there’s no guarantee of future financial stability if you save and invest, your chances of doing well in retirement increase if you do so.