{"id":7339,"date":"2014-01-20T10:39:54","date_gmt":"2014-01-20T18:39:54","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7339"},"modified":"2016-12-21T07:28:13","modified_gmt":"2016-12-21T15:28:13","slug":"best-investments-stock-market-doubters","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/best-investments-stock-market-doubters\/","title":{"rendered":"Best Investments For Stock Market Doubters"},"content":{"rendered":"

Last year was a great year for\u00a0U.S. stocks,<\/a>\u00a0among the best investments one could have made, up about 30% over 12 months.<\/p>\n

The year 2013 was great, but not the best ever. Several years in the mid-1990s were slightly better. In 1954 the index rose by 45%.<\/p>\n

As the traders often say, a good year can follow a great year. It’s hard, naturally, to put much faith in such optimism right out of the gate. Year-to-date, the index is down slightly. It briefly set a new high but also has fallen sharply below the close of Dec. 31.<\/p>\n

\"best<\/a><\/p>\n

But let’s put all this into context. Think back to, say, 1986. A house cost $86,600, gas was 93 cents. The Cold War was ending, Halley’s comet passed by and Mike Tyson was the heavyweight champ.<\/p>\n

That year, the S&P 500 started at 210 points. So, in broad terms, U.S. stocks rose nearly eightfold in value over those 27 years.<\/p>\n

Throughout, there were good, great years, bad years and years it would be best to forget. Along the way, however, you would have been rewarded with\u00a0dividends<\/a>\u00a0as well.<\/p>\n

Stock ownership is sometimes derided as a casino bet and nothing more. While it is true that one must buy low and sell high, critics of investing often fail to mention\u00a0dividend income<\/a>, which added to stock price increases gives you what’s known as “total return.”<\/p>\n

Adding in the gains from dividends, the annualized 27-year total return of the S&P 500 as of 2013 was 10.53%. Nice work if you can get it.<\/p>\n

Invested at 10.53%, your money doubles every 6.8 years. At that rate, a one-time $10,000 investment in 1986 would be worth $165,489 today. Thanks to compounding, a saver adding $10,000 a year would be sitting on $1,680,994. Very nice work.<\/p>\n

Yes, gas today costs more than 93 cents. Houses are a bit pricier as well. But that’s just normal inflation, yet another argument for stocks. Very few investments help you to outpace the inevitability of\u00a0inflation<\/a>\u00a0like stocks.<\/p>\n

Reducing risk is the key. The simplest method of keeping a lid on risk is to own stocks as part of a\u00a0balanced portfolio<\/a>\u00a0that includes bonds, real estate, commodities and international investments.<\/p>\n

No crystal ball<\/strong><\/h2>\n

Your exposure to stocks and their relative volatility should be a measure of your time left to retirement and nothing else. Not predictions of a coming decline in the economy. Not crystal ball guesses as to the closing price of the markets in 12 months time.<\/p>\n

The other major factor at work is cost. The more you pay for money management the less you have to invest, simple as that.\u00a0Investment fees<\/a>\u00a0eat up nearly a third of your potential gains. A low-cost index fund or index ETF will help you get to your goals without overpaying to get there.<\/p>\n

You need stocks in your\u00a0investment portfolio<\/a>. However, your exposure to stocks need not be and should not be 100% of your savings. Nor, however, should it be zero, or you could easily miss a year like 2013, as many investors did.<\/p>\n","protected":false},"excerpt":{"rendered":"

Last year was a great year for\u00a0U.S. stocks,\u00a0among the best investments one could have made, up about 30% over 12 months. The year 2013 was great, but not the best … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7340,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[7],"tags":[62,42,43],"yoast_head":"\nBest Investments For Stock Market Doubters | MarketRiders<\/title>\n<meta name=\"description\" content=\"Your exposure to stocks and their volatility should be a measure of your time left to retirement and nothing else. 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