A lesson in compounding -- from a buried '57 Plymouth!
I love it. The good citizens of Tulsa came up with a unique time capsule idea back in the 50s -- bury a '57 Plymouth Belvedere and some other artifacts of daily life, and unearth it in 2007 to celebrate Oklahoma's Centennial festivities.
Well, 2007 is just over a year away, and already people are getting excited about digging up the car and other artifacts, which include a case of beer, spare change, and an unpaid parking ticket. While I doubt anyone would want to drink a 50-year-old can of beer, there will probably be interest in the $100 savings account that was tied to the burial of the car. It's supposed to go to the person (or heirs) who, in 1957, correctly guessed the size of Tulsa's population fifty years later.
And here's the lesson in compounding, described in the Associated Press article:
Assuming an average annual interest of 5 percent compounded quarterly, such an account would be worth almost $1,200 today ...Not bad! Some people reading this blog might consider popping $1000 into a savings bond, or bond-based mutual fund -- assuming the value compounds at the same average rate over the next 50 years, that $1,000 will be worth $4,440 in 30 years, $7300 in 40 years, or $12,000 in 50 years. If you place it into an index fund that returns an average of 7%, the value will baloon to $8,000 in 30 years, $16,000 in 40 years, or $32,125 in 50 years.
Two caveats of calculating the 50-year-old savings account value: It doesn't consider fees which may have been levied over the course of five decades by nickel-and-diming bank executives ($1,000 minimums, dormant accounts, etc.).
It also doesn't take into account the fact that the bank account may no longer exist. Over the past five years, two major events impacted the account -- the original '57 bank was taken over by another bank, Sooner Federal, which in turn was liquidated during the S&L crisis in the early 90s. Right now, it's unsure what happened to the account and its holdings. But maybe an alternate prize -- say, a vintage case of beer -- can be arranged.
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You mean fifty years, instead of five, for the two major events? And even if a bank was liquidated, wouldn't FIDC guarantee the deposits?
According to the website the winning name (or heirs) will win the car. not $100.
Jen8: Yes, you are right about it being 50 years. And the deposit would be insured, but at this point it's a question of locating it, if it still exists -- as I suggested in my original post, fees may have eaten up the balance over the course of many decades of inactivity.
Financial Fruition: My information about the account is from the AP article, and there is an explanation why the account is not mentioned -- they can't find it, and therefore can't offer it.
Thanks for your comments!
