By Kevin Theissen
How much would $1 be worth today if invested in 1802?
Professor Jeremy Siegel of the Wharton School put together a chart of real returns for various investment asset classes, adjusted for inflation that shows what would have happened if you had invested one dollar in 1802 and held it through Dec. 31, 2012.
The results:
One dollar invested in Treasury bills would now be worth $282.
One dollar invested in long-term bonds would now be worth $1,632.
One dollar invested in the U.S. stock market would now be worth $706,199.
One dollar invested in gold would now be worth $4.50.
One dollar placed under a mattress would now be worth only five cents, its value eroded by inflation.
What will be the best-performing asset class of the next 200 years? And which ones are right for you? There is no one correct answer —except that you should consult with a qualified, independent Registered Investment Advisor to help you put an investment plan together for you.
A diversified asset allocation is generally the way to go based on your goals and needs in the short-term and long-term. That would include domestic and international stocks, bonds, commodities, real estate and other income producing investments.
People are used to thinking about their savings in terms of goals: retirement, college, buying a home, etc. But as you build your asset allocation, there are two important things to consider. The first is the number of years until you expect to need the money—or your time horizon. The second is your feelings toward risk—or your risk tolerance.
Regardless of your goal, your time horizon, or your risk tolerance, a diversified portfolio is the foundation of any smart investment strategy.
Kevin Theissen is principal and financial advisor at Skygate Financial Group, LLC., located on Main Street in Ludlow, Vt. He can be reached at kevin@skygatefinancial.com.
