Compounded gains truely are the wonder of the financial world.
If you put $1 in the bank 2777 years ago, at 1% a year you’d have $1t now, handily beating musk. At 5% pa it would take a mere 567 years! Easy! A bit of sensible financial planning by your great-great-great-something grand parents would have seen you very comfortable now.
I was going to make a joke about the problem being finding a bank that would last that long, but you’ve got me thinking.
We obviously can’t use inflation to calculate values from that far back, as we don’t have the data, dollars didn’t exist, and the dollar isn’t tethered to an underlying asset anymore, so the best comparison is probably buying power.
A loaf of bread aparently averages $2.74 at the moment, but you could almost certainly make a loaf yourself for a dollar or less.
I’ve not had much luck finding the cost of bread in everyone’s favourite historical yardstick, Rome, in that era, the best I’ve found is the cost of grain in 200bce or so. Legionaries earned about 3as per day, which would buy enough grain to make 20 loaves, so 1 loaf would be an hour or two of work (assuming a legionary is employed 24 hours a day, the grain costs a bit more than a day’s salary, and I’m rounding a lot).
So basically, if your ancient roman ancestor had invested a couple of hours of their wages, and your familial line since then had all kept it growing at a very modest 1% pa, you’d be a trillionaire by now.
True, if you managed to find a bank that lasted that long, or a currency that lasted that long. Look at the history of both banks and currencies and you’ll see that the miracle compound interest is not easy to uphold.
Those are, indeed, issues, but they could be addressed with careful management. See my reply to a sibling comment, but basically, investing a couple of hours of wages back then, and carefully moving it from investment to investment over the millenia would do the trick.
Compounded gains truely are the wonder of the financial world.
If you put $1 in the bank 2777 years ago, at 1% a year you’d have $1t now, handily beating musk. At 5% pa it would take a mere 567 years! Easy! A bit of sensible financial planning by your great-great-great-something grand parents would have seen you very comfortable now.
But how much would 1$ of 751 BCE be worth in today’s money?
I was going to make a joke about the problem being finding a bank that would last that long, but you’ve got me thinking.
We obviously can’t use inflation to calculate values from that far back, as we don’t have the data, dollars didn’t exist, and the dollar isn’t tethered to an underlying asset anymore, so the best comparison is probably buying power.
A loaf of bread aparently averages $2.74 at the moment, but you could almost certainly make a loaf yourself for a dollar or less.
I’ve not had much luck finding the cost of bread in everyone’s favourite historical yardstick, Rome, in that era, the best I’ve found is the cost of grain in 200bce or so. Legionaries earned about 3as per day, which would buy enough grain to make 20 loaves, so 1 loaf would be an hour or two of work (assuming a legionary is employed 24 hours a day, the grain costs a bit more than a day’s salary, and I’m rounding a lot).
So basically, if your ancient roman ancestor had invested a couple of hours of their wages, and your familial line since then had all kept it growing at a very modest 1% pa, you’d be a trillionaire by now.
True, if you managed to find a bank that lasted that long, or a currency that lasted that long. Look at the history of both banks and currencies and you’ll see that the miracle compound interest is not easy to uphold.
Those are, indeed, issues, but they could be addressed with careful management. See my reply to a sibling comment, but basically, investing a couple of hours of wages back then, and carefully moving it from investment to investment over the millenia would do the trick.