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1. Over the long term, stocks have historically outperformed all other investments. From 1926 to 2001, the stock market returned an average annual 10.7 percent gain. The next best performing asset class, bonds, returned 5.3 percent. 2. Over the short term, stocks can be hazardous to your financial health. If you thought the Dow's 554-point drop on Oct. 28, 1997 was rough, consider the 508-point drop 10 years earlier, on Oct. 19, 1987. The 1997 decline was a mere 7.2 percent, while the 1987 crash -- the worst one-day drop in stock market history -- chopped 22.6 percent off the value of stocks. More recently, the shocks have been prolonged and painful: If you had invested in a Nasdaq index fund around the time of the market's peak in March 2000, you would have lost three-fourths of your money over the next three years.
Retirement According to a survey by the American Savings
Education Council (ASEC), more than half of all
workers anticipate they'll need less than 70 percent
of their pre-retirement income during their golden
years – an estimate that's unrealistic for even the
most disciplined budgeters. "People often wrongly assume that their expenses are going to
come down when they retire, but in fact they often go up," said Don
Blandin, ASEC's president. "Depending on how long you live, the
kinds of medical problems you have and the kind of lifestyle you
want, you may need 120 percent of your current income during
retirement." [ more on retiring and
retirement... ] Stocks and Bonds Mutual Funds |
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