76 • MARTIN H. RUBY
account receives no interest . . . but it doesn’t lose any value, either. It just stays where it is. In the following chart, the bottom line represents $100,000 in- vested in the S&P 500®, including dividends — the most common measure of the stock market, as you may remember. This is the same line we examined earlier in the book. As you can see, after the tech bubble burst in 2000, the market dropped for three straight years. It built back up through the middle of the decade and then dropped again with the real estate bubble burst. At the end of last year, after nineteen years in the market, your $100,000 grew to $324,059, for an average total return of 6.06 percent a year. We’ve already discussed the problems you face when only earning an average of 6 percent on your savings (minus fees and taxes, that may not be enough growth for the retirement income you’ll likely want in the future). Now, let’s do a comparison and see how indexing performed during this same time period.
Made with FlippingBook - Online Brochure Maker