What a $200 Monthly Investment in a Low-Return ETF Looks Like After 25 Years
What does 25 years of $200 monthly investments in the world's most boring ETF actually produce? The answer is more inspiring than you'd think.
Overview
Here's a thought experiment. Nothing fancy, no options strategies, no crypto, no stock tips. I'm not trying to change your life with incredible returns here. It's just this hypothetical idea: What if you quietly put $200 a month into the most boring fund on the planet, for 25 years straight, and then looked at what you had at the end?
The exchange-traded fund (ETF) I'm thinking of here is the SPDR Bloomberg 1-3 Month T-Bill ETF (NYSEMKT: BIL). This fund makes money market accounts look exciting. It holds short-term Treasury bills, collects a little yield, and hands it back to you. This type of Treasury carries low interest rates even at the best of times, in exchange for ultra-stable market value. The share price has been almost flat throughout BIL's history. It's not trying to make you rich. Instead, it promises to not lose your money.
Details
So that's the experiment. Start with nothing. Add $200 a month, reinvesting those tiny distributions along the way, for 25 years. Over the past 19 years (since its launch in 2007), BIL has produced an annualized total return of roughly 1.33%. Those modest $200 sums would add up to $60,000 after a quarter-century. Together with the reinvested payouts, you'd end up with about $71,100. The fund made you more than $11,000 by just existing.
Source
Originally published at www.fool.com.