Visualizing a Lost Decade

Would you like to see an ugly picture of long term investing in the last decade? Read on.

The chart below plots the nominal and real (after inflation) returns of the S&P 500, assuming that you invested $1000 at the market peak in March 2000.

It’s not a pretty sight, is it? Investors still aren’t at the real return break-even point. It’s even worse when you consider that these plotted returns include dividends but exclude the effects of taxes and fees.

Granted, the chart is based on peak valuations but isn’t that what many folks tend to do – jump on the bandwagon when the market is hot?

Now you know why I’m not counting on the equity markets to fund my basic retirement needs. I have a different plan to provide that retirement income.

Here is a link to the source of the chart: What is “Break-Even” in the S&P 500?.

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