A Decade of Negative Returns
Last week, the S&P 500 Index made news by hitting a 4 year high. While Wall Street shamelessly hyped this grand achievement, here is the reality: At a time when tens of millions of Americans are nearing retirement, their portfolios have seen no real gains in the last four years. $10,000 invested in an S&P Index fund in 2008 is still worth $10,000. When you factor in the effect of inflation, investors have actually lost money over a four year period.
Taking a longer view of Wall Street’s performance, the data only looks worse. The S&P 500 in 2012 is trading at the same levels as it did in 1999. In effect, a 13 year investment has provided zero return(and in reality, negative returns once management fees and inflation are factored in) for the hundreds of millions of Americans who use Wall Street to steward their retirement funds.
For years, investors have been told that mutual funds are the safest and surest way to save for retirement. Yet, 5 out of 6 mutual funds have performed worse than the market itself, meaning most investors would be happy to have a portfolio that showed flat growth over the last 13 years.