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Is there a leak in your piggy bank?

Let’s first ask this question: If in June 2012 you invested $500,000 [measured by the S&P 500] in your retirement account, how much might it be worth today?

A) $1,801,012

B) $1,315,000

C) $1,030,000

D) $1,983,000

The answer is A) $1,801,912 based on the S&P 500 for the 10 years ending 5/1/2022.

You are probably astonished as you process the answer. Even if you had $250,000 about 10 years ago, it could still be $1,458,777!

Is your piggy bank keeping up with the market?

Most people are probably not sure or do not know. There are several reasons you may not be keeping up. The one I will discuss today is risk aversion. In short, you are afraid to invest because you are afraid you will lose money.

Consider the following

Have you asked yourself questions like: What would I have reasonably earned in the bond market over the past 10 years? People who choose safe investments like bonds usually do not actually know.

Instead of stocks you invested $500,000 in the bond market [Bloomberg Aggregate]. Well, how much would it be worth today?

A) $780,000

B) $1,890,000

C) $594,045

D) $1,148,000

The answer is C) $594,045 as shown below.  Yes, you probably slept better but it cost you $1,207,867.

If we were to go back 20 years, the numbers show $500,000 in stocks would have grown to $2,853,198.  Bonds would have grown to $1,035,925.

Let’s now do 30 years. $500,000 in stocks have grown to $9,040.672.  Bonds would have grown to $2,136,625

What we Recommend

There are other reasons we will explore next week. We mostly recommend equities over bonds because most people are not independently wealthy even when they believe they are investing to increase their wealth. Most people should invest for growth unless they are willing to suffer financially in their retirement years. This is where we come in to assist you! Our Private Wealth Managers, Investment Committee and Certified Public Accountant are here as resources to you. We hope you consider this while thinking about if your piggy bank is in fact leaking, or not.

Sincerely,