What if you bought US Treasury bills (cash) in 1990?
Bonds & cash · Cash. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play2.6× · S&P 500 same money: $19,429
$1,000 in US Treasury bills (cash) at the start of 1990 would be worth about $2,650 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
The story
Treasury bills are short-term loans to the US government, rolled over every few months; they are what professionals mean by cash. In 1990 they yielded around 7 to 8 percent, and through the 1990s a cautious investor earned a respectable return doing absolutely nothing. Rates fell after the dot-com bust and the 2001 recession, then rose again by the mid-2000s.
After the 2008 crisis the Federal Reserve cut rates to almost zero and kept them there until late 2015, and again from 2020 to 2022. For years cash earned essentially nothing, which is why the line in this table goes almost flat for a decade. Savers were pushed into riskier assets, as was the intention. When inflation hit in 2022, the Fed raised rates rapidly and bills paid around 5 percent again, briefly making cash a fashionable asset class. Over the whole period T-bills roughly kept up with inflation, but not much more.
The lesson: Cash is safe in nominal terms only; over long periods its real return hovers near zero, so the price of safety is giving up growth.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 1990 | $100 | $2,650 | $19,429 | 2.6× |
| 1995 | $125 | $2,120 | $14,783 | 2.1× |
| 2000 | $160 | $1,656 | $4,626 | 1.7× |
| 2003 | $175 | $1,514 | $7,727 | 1.5× |
| 2005 | $180 | $1,472 | $5,763 | 1.5× |
| 2007 | $200 | $1,325 | $4,789 | 1.3× |
| 2008 | $210 | $1,262 | $4,626 | 1.3× |
| 2010 | $212 | $1,250 | $6,071 | 1.2× |
| 2012 | $213 | $1,244 | $5,312 | 1.2× |
| 2015 | $214 | $1,238 | $3,301 | 1.2× |
| 2018 | $218 | $1,216 | $2,519 | 1.2× |
| 2020 | $228 | $1,162 | $2,092 | 1.2× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 1990, turning $1,000 into $2,650. The S&P 500 from that same year: $19,429.
On this day
- 16 May 2000: The Fed raises rates by half a point to 6.5%
- 30 June 2004: The Fed starts its first rate hikes in four years
- 16 December 2008: The Fed cuts rates to zero
- 23 December 1913: The Federal Reserve is born
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. US Treasury bills (cash) is one of 258 positions on the wheel — including the ones that went to zero.
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