Deposits vs. stocks: a 20-year gap

Assuming you pay in about $370 every month for 20 years, the total principal is about $89k.

A 3%-a-year deposit (compounded) is estimated at around $121k. That is about $32k of gain over the principal, but it shrinks further once interest-income tax is paid.

Had you made recurring investments in an S&P 500 ETF, the estimated final amount is about $333k (pre-tax, FX effect not reflected). On a pre-tax basis, that is about $212k more than the deposit.

But this comparison assumes you endured the -56.8% (financial crisis) and -33.9% (COVID) crashes over the S&P 500's 20-year journey. A deposit has none of that fear.

That the stock result is far larger than the deposit is clear from simple numbers. But to actually experience that difference, you had to endure countless bouts of volatility, including two big crashes (the 2008 financial crisis and the 2020 COVID crash).

In March 2009, when your account value fell below half of the principal, you had to overcome the fear of "am I going to lose all of this?" If you cannot overcome that fear and sell at the low, you end up worse off than a deposit.

A deposit offers low returns, but along the way there is no worry of losing principal. The choice differs by each person's risk tolerance. This service does not say which is better. It only shows both results using past data.