Behind The Curve?

Written by Dale Baker


BEHIND THE CURVE

Market index funds like Vanguard’s famous S&P500 fund andrepparttar SPY “Spyder” onrepparttar 112511 AMEX caught on inrepparttar 112512 late 90’s, right whenrepparttar 112513 long bull market turned into a crazy bubble with a blowoff top in 2000.

There are very good reasons to use index funds – low expenses,repparttar 112514 failure of most active managers to beatrepparttar 112515 indexes consistently andrepparttar 112516 statistical trend that says stocks return an average of 11% per annum over long periods of time. A cheap route to a “sure” return in a world of unreliable fund managers and individual investors who couldn’t timerepparttar 112517 market right if they had an Olympic chronometer and three judges - looks good, huh?

Just invest, forget about it and spend your time thinking about a comfy retirement. The S&P500 returned an annualized 17% per year from mid-1982 to mid-2000. Easy money with only a couple of dips onrepparttar 112518 way.

Except – what happens to your portfolio ifrepparttar 112519 market indexes go nowhere for years on end?

The statistics say that overrepparttar 112520 decades,repparttar 112521 11% return will keep you safe. But what if you catch a couple of bad decades? Most of us didn’t get serious about putting money inrepparttar 112522 market until our 30’s – and we planned to retire 20-25 years later. What does your retirement pot of gold look like whenrepparttar 112523 “usual return” falls behind and you run out of decades to catch up?

From mid-1997 to mid-2002repparttar 112524 SPX was flat. From 1998 to 2003, SPX investors lost money. Ditto 1999-2004.

Break downrepparttar 112525 expected 11% return into 5-year periods. An index investor expects to bring in 70% or more every five years, depending on how oftenrepparttar 112526 gains are reinvested. The problem with compounding is how quickly you can fall behind. SPX investors who put in money from 1998-2001 didn’t make money.

Surely they can make that up later, right?

Don’t be so sure. A tax-free portfolio that starts with $100 and returns 11% annually should have $111 after one year, $123 after two, $136 after three years and $152 after four. Five years later it’s $168.

Think aboutrepparttar 112527 leap – if you end up flatrepparttar 112528 first three years, your portfolio has to rack up a 52% gain to get back on track by year four. Hasrepparttar 112529 SPX returned 50% in one year in our lifetimes? Not that I can find. Forget about a 68% banner year.

The compounding you need to achieverepparttar 112530 magic 11% is fragile indeed. If your portfolio is flat for five years and returns torepparttar 112531 11% normrepparttar 112532 next five years,repparttar 112533 183% you should have earned forrepparttar 112534 preceding decade only turns out to be 68%. Your fifteen-year return is 183% instead ofrepparttar 112535 378% you expected.

Why's It Taking So Long?

Written by Skye Thomas


You've been studying prosperity and abundance and you understand that there is an endless flow of wealth moving about, money is passing hand to hand, as are goods and services. You've decided that you want to jump in and participate inrepparttar game. You want your fair share ofrepparttar 112510 abundant flow. You have found in your studies that your attitudes around earning money stink and you've done a lot of work to change your belief systems. You really do believe that you're good enough and worthy of some cash rolling your way and you've been diligently affirming torepparttar 112511 great cosmic forces that you are ready, willing, and able to accept your piece ofrepparttar 112512 pie. So where is it? Why's it taking so long?

First of all, your mind imagines your wealth a whole lot faster thanrepparttar 112513 real world could ever possibly move. That's part ofrepparttar 112514 lesson, learning how to keeprepparttar 112515 mind steady untilrepparttar 112516 manifesting has actually occurred. Inrepparttar 112517 end you're to realize how fast or slowrepparttar 112518 event occurs is really in accordance with your own ability to hold your thoughts and some other subtler dynamics that we'll discuss later. Ultimately you're going to have to giverepparttar 112519 world time to catch up with your wonderful daydreams ofrepparttar 112520 good life. Not every single one of us who's trying to manifest a rich abundant lifestyle for ourselves can winrepparttar 112521 lottery. There isn't enough lottery money to go around! So be patient.

What about taking action? Have you actually started working at doing something? If you're sitting onrepparttar 112522 couch watching television every night and stating your money hums duringrepparttar 112523 commercials, don't hold your breath. It's not coming. You have to take action and it has to berepparttar 112524 right action. The whole point of a flow of wealth is that it isn't dead end pooling into your bank account. It's moving through you and around you. Being inrepparttar 112525 flow means that you are a participating member. You have to be putting out some sort of effort that warrantsrepparttar 112526 flow comes through you. Ask yourself honestly, are you giving something of value torepparttar 112527 market, torepparttar 112528 universe, torepparttar 112529 flow? If you aren't, then you better think of something worth giving that's equivalent torepparttar 112530 order that you placed while sitting onrepparttar 112531 couch earlier. If you aren't putting out much, then don't expect to receive much. That's how life works.

Giving torepparttar 112532 flow of wealth isn't necessarily about working a nine to five job. If you are staying home with your children and working hard to create a wonderful beautiful home and haven for your family, then you will be blessed with treasures and wealth that could bring tears of joy to your eyes when you really takerepparttar 112533 time to see just how much you have received. Remember abundance isn't always going to show up in dollars and cents. It could be a home, running water, indoor plumbing, fresh fruits and vegetables that you didn't have to farm, milk without owning and maintaining a cow, eggs withoutrepparttar 112534 mess and noise of chickens, a car instead of having to walk everywhere. Make sure that you haven't already been blessed with a rich abundant life of love and luxury compared to most ofrepparttar 112535 peoples ofrepparttar 112536 world. Perhaps you give love and support to your friends and family. What do you receive in return? Are you remembering to count your blessings? Do you truly see what it is that you get in return?

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