Remember when the stock market tanked in 2008? It seems like yesterday, but it actually took place over five years ago. And, as Vanguard has rightly pointed out, that has a huge impact on historical return statistics.
For example, during the five-year period ending Dec 31, 2012 the Russell 3000 Index had an average annual return of 2.04%. But for the period ending Dec 31, 2013 that number jumped to 18.71%. Why? Because 2008 was no longer being counted.
In other words, the five-year average annual returns for pretty much all major equity indices skyrocketed overnight on New Year’s Eve. This is just one more reason not to pay too much attention to historical stats when making investing decisions.
And now… Here are some articles that caught my eye this past week:
- Invest 100% in Stocks When Young? — Good perspective. When starting out, timeframes are not only long, dollar amounts are small.
- Risk Averse Youth — On the flip side…
- How to Figure Your Retirement Needs — Sure, we need to make predictions about our futures, but they’re usually just guesses.
- MyRA is Not “Like a Roth” It IS One — Yup, Mike nailed it.
- The Importance of Calculating After Tax Returns — Taxes can be a real drag, both figuratively and literally. Don’t ignore them.
- Field Guide to Stock Market Corrections — Get your terms right. 🙂
That’s it. I hope you had a great weekend.