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Don’t Make Me Say I Told You So 85

How Much of a Difference Will the Rate of

Rerturn Make?

Here are the numbers for a $100,000 retirement investment
portfolio, using the real return numbers from the chart showing

returns for cash, bonds, and stocks after inflation and taxes:

Value of a $100,000 Investment After Taxes and In ation

Stocks Gov’t Bonds T-Bills
Number of Years
5.2% 0.6% -0.8%
5 $128,848 $103,036 $96,093

10 $166,018 $106,164 $92,281

20 $275,622 $122,709 $85,159

This doesn’t mean that I believe you should invest all of
your money in stocks once you retire. We discussed the risks of
investing in stocks earlier, and a big drop in the stock market that

creates a big drop in the value of your portfolio could severely

hamper your hopes for a secure and prosperous retirement.

Investors are well aware of the risks of losing money in the

stock market, since the last 20 years has been marked by two
dramatic drops in stock prices. As David Kelly, an economist

for Putnam Investments, put it: “People are haunted by that
ghost.” This has made many investors so risk-averse that many

Chapter 3: You Must Have Growth In Your Portfolio