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138 Don’t Make Me Say I Told You So
BloombergBarclays Aggregate Bond Index Average Fixed-Income Fund Investor
Average Annual Total Return 1999 - 2018 – 4.5% Average Annual Total Return 1999 - 2018 – 0.22%
Assumption: $100,000 investment over 20 years, compounded annually. Assumption: $100,000 investment over 20 years, compounded annually.
1 : $104,550.00 11 : $163,141.48 1 : $100,220.00 11 : $102,446.80
PLEASE REPLACE 2 : $100,440.48 12 : $102,672.18
12 : $170,564.42THIS WITH CHART #115 -
2 :
$109,307.03
3 : $114,280.49 13 : $178,325.10 3 : $100,661.45 13 : $102,898.06
BARCLAY'S INDEX VS. AVG INVESTOR - $100K - 20
$100,882.91
4 :
14 : $103,124.43
14 : $186,438.89
4 :
$119,480.26
15 : $103,351.31
$101,104.85
5 :
15 : $194,921.86
$124,916.61
5 :
YEARS. IT'S IN OUR SHARED DROPBOX FOLDER.
6 : $130,600.31 16 : $203,790.81 6 : $101,327.28 16 : $103,578.68
7 : $136,542.63 17 : $213,063.29 7 : $101,550.20 17 : $103,806.55
8 : $142,755.32 18 : $222,757.67 8 : $101,773.61 18 : $104,034.93
9 : $149,250.69 19 : $232,893.15 9 : $101,997.51 19 : $104,263.80
10 : $156,041.59 20 : $243,489.78 10 : $102,221.91 20 : $104,493.19
Final Portfolio Balance: $243,489.78 Final Portfolio Balance: $ 104,493.19
If we assume that this portfolio never increased in value again,
the average fixed-income investor would have approximately
$139,000 less than if they had invested in a bond index fund
that tracked the Barclays index and simply left it alone.
Over a 20-year retirement, this means that the fixed-income
investor would have approximately $6,950 less income per year
than they would have by buying and holding. That translates
to approximately $580 a month less income compared with
holding onto a bond index fund.
Taken together, the average investor who invested $200,000
in a portfolio of 50% bonds and 50% stocks 20 years ago would
have approximately $224,000 less in their retirement accounts
than they might have with a steadier approach. Over a 20-year
retirement, that means $11,000 per year less income than if the
investor had split the money between stock index funds and
Chapter 4: The Most Common Investor Mistakes