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S&P500 vs CDs (1994-2008)
Posted By Barry Ritholtz On July 7, 2009 @ 11:30 am In Investing | Comments Disabled
Imagine two people who added $10,000 to their investment accounts on January 1st, every year for the past 15 years.
One of them is risk averse. They put the money into Certificates of Deposits, getting a few percentage points each year, but the principal is insured.
The other is less risk averse; they put money into an S&P500 Index each year.
Who comes out ahead? The answer might surprise you:
CDs in 2009 yield 1% – 2%, as the market fell and then rally; if the S&P doesn’t perform well for the rest of this year, CDs will have more gains again.
As of March, Bonds had outperformed Stocks  from 1968 to 2009 — 40 years
Stocks vs. Bonds  (March 28th, 2009)
Used the CDs 6 mo (Annual) data from here:
Used the annual returns (with dividends) from here:
(did each year gain/loss seperate, then added the $10K for the next year)
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2009/07/sp500-vs-cds-1994-2008/
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 Image: http://www.ritholtz.com/blog/wp-content/uploads/2009/07/cd-vs-sp500-1994-2008.jpg
 Bonds had outperformed Stocks: http://www.ritholtz.com/blog/2009/03/stocks-vs-bonds/
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