This historical perspective provides a calmer and consistent viewpoint, similar to the ideas held by Warren Buffet and other major investors in equities.
This is cool stuff, and using my fancy hypothetical software again—the news is reassuring.
I looked at every 20-year period since 1927. And I asked, if you invested $100,000 in the Dow Jones from 1927-1947 what would you end up with? How about 1928-1948? How about 1929-1949?
This is what I learned:
The WORST 20-year period was 1929-1949. This would make sense considered it was through the Great Depression and World War II. So if you started with $100,000 in 1929, you would have ended up with $156,653 in 1949. That was the WORST.
The MEDIAN 20 year period was from 1950-1970. Your $100,000 would have grown to $821,267. Again, that is an AVERAGE or MEDIAN return over all the various permutations of this exercise. One could argue that a reasonable EXPECTATION when you invest your money is that a $100,000 will grow to $821,267 in 20 years.
The BEST 20 year period was from 1979-1999. Your $100,000 would have grown to… $2,851,836.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.
The value of fixed-income securities may be affected by changing interest rates and changes in credit ratings of the securities.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Indexes are unmanaged portfolios and individuals cannot invest directly in an index. Actual results will vary.
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