On This Friday, my post won’t be too long as the chart will speak for itself (a picture is worth a thousand words.) 😉 One of my friends working on a trading floor sent me the following chart comparing 2 investors adding $10,000 to their investment account every January 1st from 1994 to 2008.
One person can’t stand market fluctuations, he decides to invest all his money into Certificates of Deposit. His annual yield is far from being astonishing, but he sleeps well at night.
The second investor thinks stock markets always go up and is willing to get negative yield from time to time. Hence, he invests his $10,000 in the S&P 500 every year.
So if both investors started investing $10,000 on January 1st from 1994 to 2008, who has the biggest nest egg today? The answer might surprise you:
Stocks vs Certificates of Deposit (1994 – 2008)
When I saw this chart, I was speechless. While my research shows that you would have been better off with a well diversified portfolio (i.e. investing in Canadian, US and International markets), it is still scary that a simple Certificate of Deposit can beat the most important stock market over 15 years….
On second thought, I am quite sure we will be getting a whole new perspective once these recent times have been factored in… Stats are made this way; they serve the one who puts them together…
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