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Slow And Steady (Won The Race)

Bozo
Bozo   |     |   177 posts since 2011

Just for fun, I just compared the growth of $10,000 over the last six years if (a) 100% invested in VTSAX (Vanguard's low-cost total stock market fund) or (b) 100% invested in a CD ladder with an average effective yield of 4%, compounded. I used a Morningstar "growth of $10,000" chart for VTSAX and a rough guess of an "average" of 4% based on my own ladder since January, 2007.

VTSAX: $10,000 => $11,825 (with most of the increase in 2012)

CD Ladder: $10,000 => $12,653

When you hear the folks on CNBC crowing about "five year highs" in the stock market, flip it around. Were it not for dividends re-invested and 2012, stocks would have been dead money. Even so, that CD ladder still won the race.

It always helps to be diversified.




51hh
51hh   |     |   1,649 posts since 2010
1. 6-year may not be a fair period for comparison since stock holding is for long term time horizon.

2. I am not sure that the 4% laddered CD average return is obtainable in the present low-interest rate climate.
Bozo
Bozo   |     |   177 posts since 2011
It was meant to be somewhat ironic (re-read the penultimate paragraph and the last sentence).

Point being, the financial wags don't say "dead money has turned the corner".