| Just about every day we hear of people who have | | | | Companies such as General Electric, Bristol-Myers |
| planned on retiring using their IRA, 401Ks or other | | | | Squibb, Alcoa, Apple Inc, Black & Decker Corp., |
| savings to supplement their Social Security benefits. | | | | and Home Depot are just a few of the more |
| Even one of the commentators on CNBC (The NBC | | | | recognized of the 500 listed. If you want to see |
| news channel) was reflecting on her own retirement | | | | the complete list, click on this link: |
| fund and said, "It has gained nothing during the last | | | | How has this group of funds performed for the |
| 10 years!" I'm sure she is right!Most retirement | | | | past 10 years? |
| accounts, mutual funds, and other large pension funds | | | | The following link shows a chart of data from and |
| are invested in the S&P 500 corporations. | | | | graphically depicts the ups and downs of the |
| Unfortunately, many, many seniors do not | | | | S&P 500 performance. The overall chart is for |
| understand how their investments are being | | | | 58 years. (1950 through 2008) |
| managed, or simply do not understand the basic | | | | To see the chart, click on this link: |
| nomenclature of the "so-called" investment gurus. | | | | Unfortunately, if you or your financial administrator |
| In fact, today, (12/4/2008) I heard a very prominent | | | | invested in the index or stocks or funds that |
| mutual fund manager who is extremely experienced | | | | mimicked this index, you made no headway in your |
| and respected in the financial community state, "Do | | | | account during the last 10 years. |
| not sell your funds as I expect the market to turn | | | | Will the volatility continue for the next 10 years? |
| around momentarily and produce returns of 10% | | | | Obviously no one can predict the future, but there |
| over the next 10 years!" | | | | simply are better ways to invest than to buy and |
| He obviously gets paid whether your investments go | | | | hold, and you can do it yourself with such a little bit |
| up or go down, and he needs to keep as much cash | | | | of effort. |
| in his family of funds as he can. | | | | There are trading systems using funds that invest in |
| I disagree with his prediction and I will explain why, as | | | | the same S&P 500 stocks that have produced |
| follows. | | | | returns over 27.7% annually during the same 10 |
| First, let's try to make the senior or novice investor | | | | year period for which the "Buy and Hold" investors |
| understand what the S&P 500 really is, and why | | | | received 0%. |
| its members are so important to both the American | | | | Remember the rule of 72. This rule states that to |
| economy and more importantly, to the welfare of | | | | find the number of years required to double your |
| the planned retirement community. | | | | money at a given interest rate, you just divide the |
| Why are most equity funds invested in the S&P | | | | rate into 72. |
| 500? A summary of the definition from "The | | | | If your investment earns 7.78% return, like it did for |
| Wikipedia", the free encyclopedia. . . The S&P | | | | 44 years, it will double every 9.3 years (72 divided by |
| 500 is the most widely followed index of large-cap | | | | 7.78%). So, if your $40,000 investment had grown |
| American stocks. It is considered a bellwether for the | | | | at 7.78% for the past 10 years, it would be worth |
| American economy, and is included in the Index of | | | | $84,771 after 10 years. |
| Leading Indicators. Some mutual funds, exchange | | | | However, if you traded the same mutual funds and |
| traded funds, and other managed funds, such as | | | | received 27.7% return for the past 10 years, your |
| pension funds, are designed to mimic the | | | | account would be worth $461,285. |
| performance of the S&P 500 index. Many | | | | Isn't it worth looking into a better way of getting |
| hundreds of billions of US$ have been invested in this | | | | your retirement fund back on track? |
| fashion. | | | | |