I am a long term investor, buying stocks as a teen through an account I begged my father to open. I am a software developer by trade. I have an Accounting degree and an MBA along the way, so I do really understand the numbers involved. I tend to like investments that are out of the ordinary and... More
I was looking at the Schwab site where I saw an article describing the relative safety of treasuries versus stocks. The data looked intriguing:
2009 YTD*
2008
2007
2006
2005
2004
2003
2002
2001
2000
S&P 500
11%
-38%
4%
14%
3%
9%
26%
-23%
-13%
-10%
Treasuries
-5%
14%
9%
3%
3%
4%
2%
12%
7%
14%
Source: Bloomberg
So, at first glance, yes treasuries show low returns versus dramatic results for stocks. But then I started thinking what happens when you compound the results over some time period and look at the result of your imaginary $10,000 starting balance. The results were dramatic:
5 Years
10 Years
Stocks
-16%
-31%
Treauries
+25%
+81%
I don't have other sets of numbers to look at for different time periods. The results shown are very simplistic - assuming you can magically invest a fixed amount into something called "S&P500" and "Treasuries".
I think the biggest factor here is the returns are low for treasuries but there are very few negative return years.
The results appear to show more than treasuries being a "safe" investment. It looks like treasuries ARE an investment where stocks ARE NOT.
I have positions in a variety of stocks. I have no positions in treasuries (yet).
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Treasuries vs Stocks
So, at first glance, yes treasuries show low returns versus dramatic results for stocks. But then I started thinking what happens when you compound the results over some time period and look at the result of your imaginary $10,000 starting balance. The results were dramatic:
I don't have other sets of numbers to look at for different time periods. The results shown are very simplistic - assuming you can magically invest a fixed amount into something called "S&P500" and "Treasuries".
I think the biggest factor here is the returns are low for treasuries but there are very few negative return years.
The results appear to show more than treasuries being a "safe" investment. It looks like treasuries ARE an investment where stocks ARE NOT.
I have positions in a variety of stocks. I have no positions in treasuries (yet).