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The financial markets have rewarded long-term investors. Historically, the equity and bond markets have provided growth of wealth that has more than offset inflation.
Most people look to the financial markets as their main investment avenue — and the good news is that the capital markets have rewarded long-term investors. The markets represent capitalism at work. This is documented in the growth of wealth graph shown.
The data illustrates the beneficial role of stocks in creating real wealth over long periods of time. T-bills have barely covered inflation, while longer-term bonds have provided higher returns over inflation. U.S. stock returns have far exceeded inflation and significantly outperformed bonds.
Another key point is that not all stocks or bonds are the same. For example, consider the performance of U.S. small company stocks as illustrated in the graph. They have proven to be an even greater wealth creator over long periods.
Keep in mind that there’s risk and uncertainty in the markets. Historical results may not be repeated in the future.
As a fiduciary, SFA can structure the best approach to putting your money to work in order to benefit from the fruits of capitalism.
Disclosure: Past performance is no guarantee of future results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.
Source: In U.S. dollars. U.S. Small Cap Index is the Fama/French U.S. Small Cap Index; U.S. Large Cap Index is the Fama/French U.S. Large Cap Index; Long‐Term Government Bonds Index is 20‐ year U.S. Government Bonds; Treasury Bills are One‐Month U.S. Treasury bills; Inflation is the Consumer Price Index. Fama/French data provided by Fama/French. Bonds, T‐bills, and inflation data © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield).
