I’m currently reading The Forever War (Sci-Fi novel). The book assumes that leaving money in the bank will beat out inflation if left for hundreds of years. I have seen this assumed before in Sci-Fi and elsewhere, but is it really true? If so, would it just barely beat out inflation, or would you really get rich? If not, what about other investments? Is there any “sure thing” if you can go back in time and make an investment to make you rich hundreds of years later?
I don’t think you get rich that way. If you get 3% interest a year over 100 years, your cache goes up by a factor of 19. Sometime around 100 years, Henry Ford scandalized his confreres by paying his workers $5 a day, or $25 for a five day week. Multiply that by 19 to get $475 a week, probably less than what the average auto worker makes. If you try 4% the multiplier rises to 50. For each dollar you put in the bank, you now have 50. Sounds good and I don’t think the autoworker makes $1250 a week, but there are two caveats. First could you average 4% a year? I doubt it. Yes, sometimes banks pay more, but over the long haul, I suspect you would not find that on average. Second caveat: I have totally ignored taxes. Income taxes didn’t become really significant until WW II, but since then they have reduced the effective interest rate by your tax rate.
Incidentally, I don’t put much faith in official inflation rates. The one constant is how much you have to pay a person to do a day’s work.
But surely it’s important to somehow factor it in – in your example an inflation (by whatever standard you choose) of only 1% would reduce the effective multiplier from 50x to 19x, right?
EDIT: wait, did you try to account for inflation? I’m confused 
This site shows historical US asset class returns. The longest period is 84 years, not a hundred (or hundreds - not sure which you are after as the OP subject says “hundred” but the text says “hundreds”).
In real terms, i.e. after allowing for inflation, cash returns 0.6% per year, which means you would not even double your money over 100 years.
Bonds returned 2.3%, which would increase your money nearly tenfold in a century.
Stocks returned 6.6%, resulting in a sixtyfold return on your investment over 100 years.
“Hundred” or “Hundreds”; either would be interesting. I recall a really nice NYT graphic that showed X-year forward returns for maybe the DJIA or NYSE starting about a hundred years ago, and IIRC the longest period with negative inflation-adjusted forward returns was something like 17 years (1964-1981 maybe?). Can anyone find a link to that by chance?
In your link, do you know how they define “cash”? CDs or money market accounts, etc?
I don’t. They get the detailed data from a Barclays report that costs £100.
I’ll leave all that to the economists who are posting. They seem to know what they’re talking about. I quoted that part of the OP only to contrast it with the last line:
Now you’re talkin’ time travel. 
One of my favorite subjects!
You have a LOT of problems in this scenario. It actually appeared in an episode of Star Trek (The Neutral Zone), in which a financier from the late 20th century went into suspended animation, and woke in the 24th century. When he asked to check on his investments, he was told that none of those institutions still exist, nor their successors.
Even if one would be fortunate enough for the institutions to still be around at the later date, one would have a lot of trouble claiming those funds. To my knowledge, when a bank account has been inactive for a number of years, the funds are turned over to the state. I suppose with proper identification it would still be possible to claim it, but who knows if the interest would still be accruing? How sad it would be to travel 100 years through time, only to find one’s investments intact with only ten years worth of growth!
And, as was mentioned already, there will be plenty of tax to pay.
One might think that the best idea might be to invest not in the financial markets, but in tangible goods, such as jewels or bullion. Alas, this too has been tried, in an episode of The Twilight Zone - “The Rip Van Winkle Caper”. You can probably figure out how it ended, but it would be a lot more fun to watch it on YouTube. Or, you can read the Wikipedia summary here.
Playing the ponies will beat any bank or any stock investment, assuming that you know the winners. Take $20 in 1911 and bet it on the Kentucky Derby winner. Bet all your winnings again the following year, and in 8 years your bankroll will be up to $200 million.
If you put $20 into a bank and got an average return of 4%, you’d only have $1010 a hundred years later.
BUT
You can’t take cash back in time. You’ll have to take something tangible, like gold, and account for the effects of inflation.
Gold is around $1700 an ounce today. It was $21 an ounce in 1911. It would cost you $1700 to go back in time to turn it into $1060 in the bank.
Okay, I probably shouldn’t have mentioned time travel 
that’s really subject for another thread entirely. I’m more interesting in a scenario where you knew you were going to live for hundreds of years, and a very long-term investment you could make that would be highly likely of making you money in the long term. From the answers so far it sounds like the idea of compound interest making you a millionaire years down the line is basically false; it hardly beats inflation. But maybe stocks or bonds…
Just for completeness sake, Haldemann had the soldiers in the novel paid in Earth time, even if their tours of duty were served in their own local subjective time.
So, it wasn’t just a matter of compound interest but tens or hundreds of years of regular, unspent paychecks.
The village I lived in at the time celebrated the Bicentennial elaborately, for a small town. They planned to start a fund for the Tricentennial. Don’t know how they intended to get around the “inactive account” rules.
Putting money in a bank in 1911 would be risky regardless of how you compute the interest because your bank may have failed during the Great Depression and Poof . . . money gone.
you’ll of course choose a bank that never went under (and going back in time just to deposit a car factory worker’s savings is not likely to alter history.)
what’s going to spell the difference is one’s savings rate then compared to now. if your savings rate before was 20% compared to todays, say, 10% then you’ll end up with more money today if you were to deposit your savings and then jump in a day from being a ford worker in 1911 to today (shit, we’re still in dearborn??)
inflation for different goods prices is very uneven. i’ll bet there are basic commodities that are more affordable today with a $475/week salary (the equivalent of 25/week @3%) compared to a century ago.
Interesting graph, though one of the more interesting aspects is ignored both on the webpage and in your summary.
Looking at the graph (or reading the “20 years” column in the page’s table) you see that government bonds have performed just as well as stocks over the past 40 years !
(I am not advising Dopers to sell stocks and buy bonds. I’m just observing, once again, that the popular truism “stocks are simply better than bonds” is actually a non-truism.)
It can take a long time for the “popular truisms” in investing to come true. Here is a recent blog article on that subject.
Not necessarily. You may not be able to use modern cash, but you should be able to scour antiques stores for old bills and scrounge up a hundred or so in money that was around in 1910. Sure, it’ll cost you more than face value, but I’d guess that it’d be less than the equivalent cost of buying gold now and selling it in 1911.
You’ve heard the story of the guy who had himself frozen after making some investments. He’s thawed out a hundred years later, and the first thing he does is call his investment firm. The broker says “Your assets are worth about three trillion dollars now!”
“Wow!” says the guy.
Then the operator cuts in and says “Please deposit 2 billion for the next three minutes…”
I’m always reminded of one of Robert Heinlein’s aphorisms from the Notebooks of Lazarus Long:
Good point. This site says you can get a 1914 $20 bill for $50, which is considerably less expensive than time travelling with gold.
Me too.
Of course, that was also the universe in which leaving the gold standard was considered a bad thing.
And, extrapolating backwards, that means that $100 in 1811 (not out of the reach of many, if not most, people) compounded to $100 million today is apparently worthless. I’ll take the $100 million, please. And the 7 percent interest, even if only compounded monthly.