|
Average Annual Total Returns (as of 10-31-2011)
|
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|
1 |
3 |
5 |
10 |
15 |
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| Standard & Poor’s 500 Composite Index |
N/A |
8.07% |
11.41% |
0.25% |
3.69% |
5.77% |
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| DJIA |
N/A |
10.34% |
11.80% |
2.53% |
5.39% |
7.04% |
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| NASDAQ |
N/A |
7.06% |
15.97% |
2.55% |
4.73% |
5.39% |
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| MSCI All Country World Index ex- USA |
N/A |
−4.25% |
13.43% |
0.08% |
8.05% |
5.39% |
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| Source:Bloomberg |
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This chart shows the price of long-term investing, greater volatility and how the luck-of-the-draw will play an increasingly important role in retirement planning.
Comparing domestic and international indices, the chart shows that the average return over 15 years of all the indices was 5.89%, excluding fees. The chart also shows the volatile returns for each index year, which could have a large impact on people who needed to cash out of the market. For instance, NASDAQ and MSCI Index investors were particularly hard hit during the past 15 years and assumed significant risks without much reward.
Going forward, many invetsment gurus expect increased market volatility as the financial services, banking, manufacturing and housing industries restructure. These recoveries will be hampered by timid consumer spending.
The point of this chart is to show investors that diversification outside of equity indexes may provide some buffer to erratic returns, but the volatility will remain.
The best advice is to take control over the few investment variables you can control: fund expenses, asset allocation, and working with funds and advisers that reveal their compensation, so you get actual objective advice; not recommendations tainted by revenue sharing.
Given the volatility in these charts, you have to pick your advisers carefully. Follow the rule: One strike and you are out. The reason: The money you lose in these markets will be difficult, or impossible, to recover as your grow older.
Note: Data at NAV as of Oct 31, 2011 (updated monthly)
