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"is just investing in a S&P index fund for my IRA a good thing."

Hi kryszrich,

There's a lot of historical data on Crestmont site<>. It is for the S&P500 from 1900 to 2004/5.

The first chart can be looked at for several conditions, then pick any time period and see what the returns were:

You will find some rather long time frames of little or no returns, especially when inflation is taken into account. At least in the IRA you can disregard the chart that factors in taxes.

"Stock Matrix Options

Returns depend upon the starting and ending point. This series of charts present the compounded annual returns for an investor that began investing during any start year since 1900 and ending with any subsequent year. The versions presented reflect those for taxpayers (i.e. individuals, trusts, etc.) and for tax exempt or tax deferred investors (i.e. retirement accounts, pension plans, foundations, etc.), as well as returns on a nominal and real (after inflation) basis. The stock market index, dividend, and P/E ratio data is based upon the series developed and presented by highly acclaimed Professor Robert J. Shiller (Yale University; Irrational Exuberance) and others. Other data is developed from other sources believed to be reliable.
      Version       Single Page       Double Page      
Stock Index Only 11 x 17 8 1/2 x 11
Taxpayer Nominal 11 x 17 8 1/2 x 11

Taxpayer Real 11 x 17 8 1/2 x 11
Tax-Exempt Nominal 11 x 17 8 1/2 x 11
Tax-Exempt Real 11 x 17 8 1/2 x 11"

In regards to the much quoted 10.4 % *average return*....

Not everyone agrees with this view... Something to consider...

" Distorted Averages

Investors only can spend compounded returns, not average returns. This chart presents the difference between average returns and compounded returns for investors. The two issues assessed are the impact of negative numbers and the impact of volatility, as measured by the variability within a sequence of returns. Both issues can devastate the actual returns realized by investors compared to the average. The first issue—negative numbers—is demonstrated by this example: an increase of +20% and a decrease of -20% may average zero, yet the net result is a loss regardless of the order in which they occur. The second dynamic—volatility—is illustrated by another example: the compounded return from three periods of 5% returns is greater than any other sequence that averages 5%."

" Waiting For Average

The long-term average return from the stock market is 10.4%. As the earliest baby boomers are now beginning to retire, they will be relying upon their investments for income. The latest boomers have two more decades to compound their savings into a retirement payload. At 10%, boomers young and old—so to speak—have a good chance of a secure retirement. Yet, from 2005, what length of time is needed to assure the long-term average return?

NEVER—investors from today will never achieve the long-term average return. Not in ten years, twenty years, fifty years, or the seventy-nine years that represent the most recognized long-term average return."

Lots of historical data on the site... Time of entry into the market is critical to returns...

"Secular Cycles"
"Significant Swings"
"Generation Returns"
"It's Not The Economy"
"P/E Ratios & Inflation"
"Stock Market Returns & Volatility"
"Must Be Present To Win (Or Lose?)"
"Impact Of Rebalancing"
"Stock Market Yo-Yo"
"Dividend Yield vs. P/E Ratio"
"Deja Vu"
"Natural Pinnacle To P/Es"
"Shiller's Shortfall"
"Markowitz Misunderstood"
"Portfolio Mismanagement"
"A Minsky Review"
"Components Of Return"
"Maybe It's Different This Time"

You might like to get of view of the past even if it doesn't guarantee the future. SPYders may or may not be the best approach...

Regards, Ken
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