With today's release of the latest Consumer Price Index data, we finally have all the information we need to update our signature investing-related tool The S&P 500 at Your Fingertips! The tool now spans from January 1871 through March 2007 and incorporates all the available dividend, earnings and inflation data available for this time span.
Running the numbers, we find that the year-over-year gain in the S&P 500 from March 2006 to March 2007 provided a non-inflation adjusted return of 8.75% without the reinvestment of dividends and 10.73% with full dividend reinvestment. The tool does not consider the effects of taxes or commissions and fees in its calculations, which vary from year to year and broker to broker.
If you factor the 2.78% gain in reported inflation over that time period, the real rates of return for the S&P 500 are 5.97% without reinvesting dividends and 7.95% with reinvested dividends.
And if we just run the tool's newly updated default settings, from January 1871 to March 2007, we find that the S&P 500 has provided nominal returns of 4.32% without dividend reinvestment and 9.15% with dividend reinvestment. Considering the very long term rate of inflation of 2.08% from January 1871 through March 2007, the real rates of return for the S&P 500 are 2.24% without reinvesting dividends and 7.07% with full reinvestment of dividends!
One last note: the dividend and earnings data taken from Standard & Poor reflects their estimates of these figures for this latest period, which means they may be subject to revision in the future. We'll update the tool along with S&P's data as they do each quarter.
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