question about money, calculating value over 100 years.

[trevorjk]

ok, so my grandparents passed away this last year. with that said my mom and her family went through everythign my grandparents had. in doing so they found my great great grandfathers will.

in that will they found out he gave out roughly $30,000 when he passed away back in 1918.

now that money is long long gone, but as a family we are very curious as to what $30,000 in 1918 is worth today?

i tried to find some info on the web but im not sure if im looking at the right information.

http://www.measuringworth.com/uscompare/

anywhere from $400,000 to $5,000,000... so can some one please explain or do the translation for me?

Thanks
Trevor

[teufelhunden]

It depends on one very crucial detail; the average annual rate of return on that money. If he was able to get the average for stock growth over the period [7%], this is how the function would look [Future value of a sum being P * (1+i)^n]:

30,000*1.07^79=6,286,945.45 [tyvm google calculator<3]

However, most mutual fund managers can't match, let alone beat, the S&P500 so that's overly optimistic. A more reasonable average annual rate of return is probably 4.5%;

30,000*1.045^79=971,198.94

So as you can see, the numbers can vary a great deal due to the wonderful concept known as compounding.

[trevorjk]

thank you for the help! we were curious as to a round about figure. its just odd finding stuff like this out

[Thordic]

You need to look at an inflation calculator, not an interest calculator.

What cost $30000 in 1918 would cost $456,714.20 in 2006.

[teufelhunden]

You need to look at an inflation calculator, not an interest calculator.

What cost $30000 in 1918 would cost $456,714.20 in 2006.

That just shows the equivalent amounts; so yes, that 30k was like 450k in today's money. But had it been invested, it'd have been a -touch- more than that. Even in a savings account.

[trevorjk]

the very ODD thing about the will is that he gave out $30,000 to wife kids ect and he also gave $10,000 to family pets haha man i have a brainiac in the family

[Thordic]

I understand that if it had been invested it'd be worth more. My impression was he was trying to gauge exactly how much money that was since a loaf of bread was like a nickle back then.

Either way, he has both answers now.

[bentothejam1n]

the very ODD thing about the will is that he gave out $30,000 to wife kids ect and he also gave $10,000 to family pets haha man i have a brainiac in the family

probably avoiding some sort of tax

[teufelhunden]

So, OK, I'm a stupid rookie but I caught my mistake; it's 89 years, not 79.

Hence, here are the proper numbers:

7%: 30,000*1.07^89=12,367,373.30

4.5%: 30,000*1.045^89=1,508,242.26

On the upside, my mistake goes to show just how big of a difference even a few years on the relative scale will do; we saw roughly a doubling of a 7% investment.

[trevorjk]

man to think, if he would have saved that for future generations instead of giving it to animals