One dollar invested in stocks in 1802 would have grown to $8.8 million in 2003, in bonds to $16,064, in Treasury Bills to $4,575, and in gold to $19.75*. Jeremy J. Siegel, Russell E. Palmer Professor of Finance at the University of Pennsylvania’s Wharton School, states that “Over time, the total return on stocks has exceeded that of any other class of asset…. ”
Understanding your long-term goals when it comes to equity and bond investing is crucial. The amount of products available for retail investors can be daunting, and the cost of owning shares varies wildly. Thus, the average person is reluctant to trust their hard earned money to anyone else because stocks and bonds are simply too confusing and not worth the trouble.
Why not bet on it all? Owning the top 500 U.S. companies sounds impossible, but the reality of owning the top 500 publicly traded U.S. companies is 100% obtainable. Through Vanguard’s low cost index funds you are given the opportunity to offset a tremendous amount of risk by broad exposure to the U.S. market’s best companies. In 2014’s annual “To the Shareholders of Berkshire Hathaway Inc.,” Buffett states, “my instructions to the trustee of my estate could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”**
And so, heeding the advice of one of the world’s richest and wisest investors, Warren Buffet, seems like a safe way to invest in your future, and that is precisely how Baer Goldman invests in stocks and bonds. For more information please check out the resources below.
* Siegel, Jeremy. ‘Library Of Economics And Liberty’. Econlib.org. N.p., 2015. Web. 21 May 2015.
** Buffett, Warren. (2014, February 28). To the Shareholders of Berkshire Hathaway Inc, pg 19. Retrieved May 21, 2015