Did you know



















  

Strategy
• Assuming an annual return of 7% per year, if you invest $10,000 per year from age 30 to age 40 ($100,000 invested), you would have $809,844 at age 65. If you invest $10,000 per year from 40 years old to 65 years old ($250,000 invested), you would have $690,564 at 65 years old. This is 15% less!

• Diversification and rebalancing are key:
if you have two investments, one with annual returns of 0%, 5% and 15% (20.8% over 3 years) and the second one with annual returns of 30%, -30%, and 30% (18.3% over 3 years), an annual 60%/40% combination of the two investments will have a 3-year return of 23.3%, better than each of the two investments standing alone

• From 1929 to 1949 (20 years) and from 1968 to 2009 (41 years), $1 invested in bonds was a better investment than in stocks

Past Market Performance
• Between 1983 and 2003, the US stock market return was 13% but the average investor had a 7.9% return which was 5.1% less. The average equity fund return was 10.3%. This highlights why you need a good financial advisor

• $1 invested in small cap stocks in 1926 would have become $9,550 in 2008 vs. $2,045 in large caps, $99 in bonds, $41 in gold and $20 left in cash

• $1 invested in French bonds in 1900 would have become $0.8 in 2008 vs. $30 in French Equities (adjusted for inflation)

• The last two occurences US large-cap stocks total return was negative over a 10-year period was in 1938 and 2008

• From 1985 to 2008, the probability of a negative return for the S&P 500 over any 1-year period was 20%

 

Economy
• From 1967 to 1984, the average inflation rate was close to 7% (vs. close to 3% average for the past 100 years)

• US unemployment rate in 1895 was approximately 18% and 25% in the 1930’s (vs. 10% expected peak in 2009-2010). In June 2009, the U-6 unemployment rate (headline unemployed around 9.4% plus marginally employed) is above 15%

• The top marginal US tax rate was 93% in the 1950’s - 1960’s. It was 70% in the 1970’s, 50% in early 1980’s and 35% from 2003 to 2009

• The US savings rate was between 8% and 12% from 1960 to 1980. It was below 2% in 2007

• In 2007, the median household income was around $50,000. The top 10% had income above $140,000

• In 2007, the median household net worth was around $120,000. The top 10% had a net worth above $900,000

• The 2008-2009 recession is very different from the Great Depression. During 1929-1933, the real GDP contraction was -29% (vs. -4% in 2009), unemployment rate was 25% (vs. 10% in 2009), consumer prices went down 25% (vs. down 2.8% in 2008), money supply was down 33% (vs. up 12% in 2009) and the budget deficit was 2.6% vs. 10.1%

 

Go back
         
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. We believe the information obtained from third-party sources to be reliable, but Bourbon Financial Management, LLC does not guarantee its accuracy or completeness. Examples provided are for illustrative purposes only and not intended to be reflective of results you should expect to attain. Past performance is no guarantee of future results.