Historical Ups and Downs
Understanding the potential of your investments.
Growing your money through investing doesn’t proceed on a straight line. Most investment values rise and
fall over time. Remember, the higher the return potential of any specific investment, the higher the
risk.
All investments have some sort of risk. You can lose money in the stock and bond markets. Even
investments that guarantee not to lose the money you invest may deliver returns that fail to outpace
inflation — so you could lose purchasing power over time.
One measure of risk, volatility, is an integral part of the securities (stock and bond) markets. It’s
what makes the value of an investment rise or fall. Depending on the particular security, the swings can
be fast and furious.
More
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Best Performance
|
Worst Performance
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Average
|
|
S&P 500
|
37.58%*
|
-22.10%*
|
13.04%*
|
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Best Performance
|
Worst Performance
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Average
|
|
LEHMAN BOND INDEX
|
18.47%**
|
-2.92%**
|
6.65%**
|
Returns that are worth the risk.
If you stick to a buy and hold strategy, and stay broadly diversified, you are more likely to come out
ahead over the long term.
While volatility in the bond market is less extreme than in the stock market, the prices and yields can
vary significantly. And in some past periods, the returns from bonds exceeded the returns from stocks.
CD always provide positive returns, so at times they’ve beaten both stocks and bonds — with absolutely
no risk. Is there any better reason to diversify your portfolio?
*For the period with the year ending 12/30/1988 to 12/31/2007 as reported at
http://www2.standardandpoors.com/spf/xls/index/MONTHLY.xls on 6/01/08.
**For the period with the year ending 12/30/1992 to 12/31/2007 as reported at
http://www.lehman.com/fi/indices/index.htm on 6/01/08.