Investment Pieces

A Lesson on Equities

The following chart from Ibbotson & Associates and Morningstar, independent asset allocation and research firms, summarized USA asset class (i.e., stocks versus bonds) returns between 1926 and 2014 as follows:

Canadian market returns show similar but slightly lower returns.

The chart indicates that a $1 investment in large-capitalization stocks (with a market capitalization of more than $5 billion, i.e., Apple, RBC or Nestle) in 1926 would have grown to $5,317 by 2014. A similar $1 invested in long-term government bonds in 1926 would have grown to only $135 by 2014.

Large-cap stocks did 39 times better than long-term government bonds!

Now that you have read the six pieces of the investment puzzle, are you ready to start investing?