A Little Perspective…Perhaps
Jul 28 2009
I’ve been reading a lot about how everything in the investment world has changed with this recent market decline. People are saying asset allocation is dead…that those that buy and hold aren’t too smart…that the recent crash is unlike anything we’ve ever seen. Well let’s think about that for a second.
I don’t know about you, but I didn’t dump all my money into the market at its peak when the Dow was up around 14,000. In fact, I’ve been doing that boring old dollar cost averaging since about 1987. I’ve been in both active and passive mutual funds, own some bond funds and some international fund shares. I’ve got some money in the TSP. Pretty average, pretty boring.
But here is the interesting part. Since I did dollar cost average and continue to do so, I’m up about 4.95% on an annual basis since I started investing in 1987 (based on Internal Rate of Return calculated on Quicken). Over that same time period, inflation is up about 2.97% on an annual basis (from dollartimes.com). So, over the last 22 years or so, my portfolio has performed just about like what one would expect for a diversified portfolio, despite the 30% or so loss in the S&P 500 within the last year.
Kind of makes you wonder what all the talking heads are talking about…
Colonel, TSP? Telecomunicacoes de Sao Paulo S.A. – TELESP (TSP)? Symbol, acronym, abbreviations? Thanks.
Sorry about the acronym. TSP stands for the Thrift Savings Plan, the government sponsored retirement savings plan similar to a 401K plan. It offers several funds including a common stock index, small-cap index, international index, fixed income fund and government bond fund as well as target date funds. TSP is available to active duty military as well as GS employees.
I’ve been out of pocket for a bit, so I apologize if my response has been slow.
Curt Sheldon
Cool site, love the info.
Please don’t think me a cynic, but…that kind of pedstrian return is just NOT that impressive.
Give me the STACKS of gold coins my grandaddy bought in 1965 and the 17 jars of Roosevelt dimes he was smart enough to save and I will be just fine.
The stock market is a shell game.
Coupled with my disdain for consumer debt, my Depression Era ethos passed down from that same grandfather, and the 52 acres of farm land bought with each pay raise since my husband was promoted to O-3—-I could care less if the whole system falls in.
And, mark my words.
IT. WILL.