The Magic of Compounding and Dollar-Cost Averaging

Two hundred dollars a month, every month and this is his 480th month.

Forty years — that's how long my friend Charlie has been investing in the stock market.

Charlie's no big-time investor. I first met his acquaintance more than two decades ago when I was a New York reporter for PBS' "Nightly Business Report." Charlie then was a sausage vendor.

He'd catch my stand-ups. I'd catch his business — a brisk business.

Charlie joked with me how he worked at the corner of Wall and Broad too, so why wasn't I interviewing him?

I remember talking to him right after the '87 stock market crash.

He told me he wasn't concerned.

"I put the same money in no matter what," he said. "Two hundred bucks. The 20th of every month."

Including the very day after that October 19 crash.

"I guess I just bought more stuff cheap," he bragged. "I'm not much worried."

Up markets, down markets, in-between markets — Charlie was there: same amount, same day, same story.

And now on a happenstance meeting with him this day, Charlie says he's doing OK.

When I ask "how OK," he spits out this figure: $1,318,556 and 58 cents.

The sum of 40 years labor pouring the same 200 bucks into the market — month in, month out.

I didn't even ask where he put the money. I assumed, calculating backwards the roughly nine or 10 percent return, maybe an index fund.

Who knows?

All I do know is Charlie the sausage vendor is doing OK.

A little guy who saw the magic of compounding and dollar-cost averaging. Now every bit the hot shot as the condescending brokers who used to ignore old Charlie. But who would now just love to do business with Charlie.

If only he'd let him. But... he won't.

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