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INSIGHTS FROM CFA SOCIETY SINGAPORE
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Your portfolio isn’t a century-old magical compounding machine

The lived experience of real-world investors is a gauntlet of taxes, fees and the need to spend money

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    • While the theoretical S&P 500 grew US$1 into US$333 between 1926 and 1986, a realistic mutual fund return for that same period would have been only US$137.
    • While the theoretical S&P 500 grew US$1 into US$333 between 1926 and 1986, a realistic mutual fund return for that same period would have been only US$137. PHOTO: BLOOMBERG

    Kenneth Gan

    Published Sat, Mar 14, 2026 · 07:00 AM

    A LOOK at the long-term chart of the US stock market may make you wish you were born centuries ago, especially since a dollar invested in 1871 would have grown to half a million dollars today.

    If the “magic of compounding” works as touted, why isn’t Orchard Road cluttered with the descendants of Raffles-era investors who forgot they owned a few shares?

    The answer is simple: the returns in financial textbooks are largely mathematical fantasies. A recent report from the CFA Institute Research Foundation titled Stocks for the Long Run Revisited describes these mythical gains as “the return nobody got”.

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