Quote:
Originally Posted by Bill Bumface
You can literally dump money blindly at ETFs and beat 7%:
http://www.moneysense.ca/save/invest...rmance-tables/
Rates of return (%)
Couch Potato portfolio Canadian stock index
(annualized since 1976)
10.7 10.4
Year-by-year performance (%)
Year | Couch Potato portfolio | Canadian stock index
1976 18.3 10.1
1977 6.0 9.8
1978 15.6 28.7
1979 18.7 43.6
1980 21.7 29.1
1981 -6.7 -11.0
1982 24.4 3.3
1983 22.7 36.2
1984 8.3 -3.2
1985 29.4 24.1
1986 13.6 8.1
1987 1.5 5.0
1988 9.0 10.2
1989 20.6 20.4
1990 -5.2 -15.5
1991 21.5 11.1
1992 8.7 -2.2
1993 21.9 31.5
1994 -1.1 -1.0
1995 23.8 13.6
1996 20.8 27.3
1997 23.4 14.1
1998 16.1 -2.4
1999 12.6 30.7
2000 3.8 6.6
2001 -5.3 -13.3
2002 -8.9 -13.1
2003 12.3 25.7
2004 8.6 13.6
2005 12.6 23.2
2006 11.7 17.0
2007 5.3 9.8
2008 -23.2 -33.0
2009 20.88 35.05
2010 12.49 17.62 |
Index funds only make sense for people investing long term. We're talking about people looking to buy a house within 5 years with their savings.
Index funds are often very volatile. They contain a lot of the hot stocks and industries. For example in 2000 around 50% of the S&P was in tech and in 2008 40% was in financials.
So you basically have to hope you don't get stuck with with a 2008, 2001-2, 1997, or 1990 in that 5 year period that your supposedly saving.
Once again, I think this is better advice for people who already have lots of capital and can afford to tuck it away long term.
My financial advisor specifically stated to me that I should avoid index funds if I was looking to buy a home in the next few years.