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86 Don’t Make Me Say I Told You So

investors are shunning the chance for growth in their retirement
investments in favor of a fixed-income-only strategy. This

strategy, which may lessen volatility or preserve capital better
than stocks, can lead to a loss of purchasing power.

To see how stocks can provide more growth and income than
fixed-income investments, let’s compare an investment in a stock

mutual fund with an investment in six-month Treasury Bill over

the last 20 years. The stock fund here, The Investment Company
of America, is a conservative, large-cap fund with an 86-year track
record.

Assumptions: $100,000 investment on January 1, 2000; all
dividends and interest reinvested; annual withdrawal of 4% per

year from each investment.

Investment Company of America (ICA) vs. 6 Month Treasury Bill. 2000– 2020
The Investment Company of America A (AIVSX): $100,000 initial investment on 1-1-2000. Dividends and capital gains are reinvested. Withdrawals of 4.00% (annually)
of initial investment from 01/01/2000 to 01/01/2020 every twelve months, on the last day of the month as long as funds are available. The initial investment is subject
Citigroup 6-Month Treasury Bill: $100,000 initial investment on 1-1-2000. Withdrawals of 4% (annually) of Initial Investment from 01/01/2000 to 01/01/2020

ICA Ending Value
$160,000 $147,886
$140,000
$120,000
$100,000
$80,000
Citigroup Ending Value
$60,000 $57,133
$40,000
$20,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020
The Investment Company of America A CITIGROUP 6-MTH TREAS BILL
Source: American Funds, 2020

Chapter 3: You Must Have Growth In Your Portfolio