Stocks
S&P Returns vs Bonds
19.30%
Versus Bonds
•
an hour ago
19.30%
Versus Bonds
•
an hour ago
6m High
6m Low
S&P 500
61.29
50.64
Bonds
97.71
93.15
S&P 500
Bonds
Performance & sentiment
Bear Market
Sources: SPX, iShares IEF Index
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Highlights
Good For
Dividends & Price Appreciation
Time Horizon
Short - Long
Liquidity
Very Liquid
The past decade has been great for stocks. From 2011 through 2020, the average stock market return was 13.9% annually for the S&P 500. Over that decade, only one year—2014, up 13.8%—was close to the 13.9% average annualized return. The catch? Nobody knows which years will be above or below average. This is where the one-year average is helpful only in setting the stage for stocks as good long-term investments.
Did you Know
Warren Buffet vs Hedge Funds: In 2008, Warren Buffett issued a challenge to the hedge fund industry with a $1 million bet that investing in the S&P index and passively investing (not touching the investment) for 10 years would beat any hedge fund. He won.
March 16, 2020 was the second largest daily drop for the stock market in history, falling -12.93% in a single day. 8 days later on March 24, 2020, the market jumped +11.37% on the day—the 4th biggest gain in history for a single day.
The most expensive stock in the world is Warren Buffet’s Berkshire Hathaway (BRK.A) at over $430,000 per share.
Monster Energy (the drink) has one of the biggest share gains of all time, of any stock in history. The stock price has increased by over +67,000% since launching on the stock market in 1985. In 2005 their stock was trading at $0.70, and today it's worth over $87.00.
Consideration
The ability to earn regular passive income from dividends.
Protect your wealth from inflation, as the returns often significantly outpace the rate of inflation.
The stock market can unlock significant wealth. For example, $10,000 put into the S&P 500 10 years ago would have grown 272% to $37,115. The same investment into Tesla would be worth $1.8 million (+21,323%).
Reasons to Invest
The stock market can be a somewhat volatile investment. If it crashes, you could lose a significant portion—or possibly even all—of your initial investment.
You'll have to pay capital gains taxes on the money you make from the stock market, and if you trade frequently, that could trigger a higher tax bill.
Even the greatest stock market investors lose money regularly, and holding in the face of a downturn is often a wise strategy. You have to be able to stomach losses to avoid selling impulsively.
Drawbacks
How You’re Taxed
Capital Gains
Income Tax
Investors are subject to short-term capital gains when selling stocks owned for one year or less, which are taxed at ordinary income tax rates. Long-term capital gains are applicable when assets are owned for more than one year, with tax rates ranging from 0% to 20%, depending on your total taxable income.