Gloomy Number Forecast

Physician's Money DigestSeptember30 2004
Volume 11
Issue 18


Back when stocks were yielding20% a year, market bears noted that thehistoric return on stocks was around8% to 10% a year. Now that the stockmarket has fallen into a stupor, optimistspoint to the same historic returns.But even at 10% a year, you'll realizethe stock market hasn't been a terrificinvestment once you start crunching thenumbers to account for inflation andexpenses. Take, for instance, the 10.4%average annual return from 1926through 2003. Back out the inflationrate, taxes, and brokerage commissions,and then adjust for some badstock picks. The resulting final averageannual yield gets pared down to a scant2.4%. You can't do much aboutinflation and taxes, but you can paredown expenses and avoid picking individualstocks that turn turkey byputting your money into a low-costindex mutual fund.

Related Videos
© 2024 MJH Life Sciences

All rights reserved.