A key tenet of successful investing is to remain invested and diversified so that your portfolio may benefit from the unpredictable nature of the market. However, how are these returns impacted by an investor's need for income?
This chart tells a familiar story about the benefits of diversification and asset allocation, but the lesson remains important. Trying to pick the “winning” asset class every year is nearly impossible. A key tenet of successful investing is to remain invested and diversified so that your portfolio may benefit from the unpredictable nature of the market.
Asset class returns for the last 20 years
How are those returns impacted by the need for income?
Growth of $100,000 over the last 20 years, withdrawing 4% every year
Asset class analysis (1996-2016)
The above is a hypothetical example shown for illustrative purposes only. It does not reflect the impact of taxes or inflation.
See page one for representative indices.
The performance shown is not indicative of the performance of any mutual fund or other investment product.
Standard Deviation: A measure of risk; it calculates the variability of returns by comparing the Fund’s return in each
period from the average Fund return across all periods.
Diversification does not guarantee a profit or protect against a loss in declining markets. All investments are subject to
risk including possible loss of principal.
Investments in debt securities are subject to credit and interest rate risk. An increase in interest rates typically causes
the value of bonds and other fixed income securities to fall. Factors unique to the municipal bond market may negatively
affect the value in municipal bonds.
Investments in international securities are subject to certain risks of overseas investing including currency fluctuations
and changes in political and economic conditions, which could result in significant market fluctuations. These risks are
magnified in emerging markets.
Investments in small-capitalization companies are subject to greater price volatility, lower trading volume, and less
liquidity than investing in larger, more established companies.
Real estate investments are subject to factors such as changing general and local economic, financial, competitive and
The S&P 500 Index is proprietary data of Standard & Poor’s, a division of McGraw-Hill Companies, Inc. All rights reserved.
The indices shown on page one are unmanaged, are not available for investment and do not incur expenses.
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Uncertainty over the future of Social Security, longer life expectancy, and inflation all factor into how much income you’ll need in retirement. Your annual retirement income requirement has the potential to be significantly higher than what you anticipate.Read Full Perspective
Diversified investors may be frustrated by the underperformance of their international equity returns relative to their domestic equity returns over the last seven years.Read Full Perspective
A short- and long-term review of the power of diversification.Read Full Perspective