100 Bucks Did This

By Dian Vujovich

The past decade has been a puny one when it comes to looking back at returns. In the mutual fund arena,

According to John Waggoner’s column in USA Today, “What investors can learn from a dreary decade”, the average equity fund gained 22 percent over the past decade. That’s an average of 1.11 percent. Things like government bonds beat their returns (up 70 percent) and gold bullion out shown nearly everything (up 275 percent).

I know many fund investors who moved money out of their 401(k)s and into money market funds in 2009 because of the market’s—and our general economy’s—woes. And while that comforted them emotionally, they missed the 32 percent gain the average equity fund enjoyed last year. Those darned emotions can really mess our investment returns up. But, we’ve got them to deal with. So, so be it.

As long as I’ve been writing about mutual funds and investing, the mantra has been “long-term” meaning one invests for the long-term, which I agree with. That often translates to holding on for the long-term no matter what the market is doing—slicing your portfolio into bite-sized pieces or rewarding you in huge fat gram kinds of ways.

Hanging in there through the rough times, however, isn’t easy. I haven’t always been able to do it and on the one hand have paid for my moves when I’ve exited the market. On the other hand, the moves have quelled my fears of losing all of my precious invested pennies. On the third hand, however again, is the reality that markets have always come back. Not necessarily quickly, but they have. That fear thing is truly a three-edged sword.

Back to Waggoner’s column. It included a chart showing how $100 invested every month into one of the 17 largest equity funds around would have grown over the past decade. Until I can figure out how to cut-and-paste that chart and include it here, check it out at:
http://www.usatoday.com/money/perfi/funds/2010-01-04-dreary-decade-for-investors_N.htm?loc=interstitialskip .

You may be surprised at what you learn.