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Potential for Experiencing Negative Returns in Domestic Stocks, January 1926 to March 2025
Volatility can unnerve investors who watch the stock market too closely. This table seeks to put volatility in perspective by suggesting that longer holding periods are historically less likely to experience negative returns, assuming portfolio performance mirrored the performance of the S&P 500 index.
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Dollar-Cost Averaging
Dollar-cost averaging allows an investor to consider the performance of investments made at regular intervals compared with an investment made in a lump sum. This example compares the potential current value of two portfolios valued at $12,000 on April 1, 2015. The lump-sum portfolio was fully allocated to stocks whose performance mirrored a reference stock index on that date, while the dollar-cost averaging portfolio was allocated first to a portfolio that mirrored the performance of 3-month Treasury bills, then gradually reallocated to the reference equity portfolio at the pace of $200 per month.
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Return and Risk Measures for Domestic and Global Investment-Grade vs. High-Yield Bonds
This table shows various return and risk measures for indexes representing different types of bonds for all possible 12-month holding periods beginning on the first day of each business month starting with April 1, 2005, and ending with March 31, 2025.
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Risk and Return Since 1990
This chart demonstrates the historical relationship between risk and return for indicated business sectors as represented by the S&P 500 index sectors from January 1, 1990, through March 31, 2025.
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Range of Returns for Three Major Asset Classes
With higher return potential usually comes greater risk. Consider these performance statistics for indexes representing major asset classes. Stocks may have shown the greatest average returns but also the widest range of observed returns. Bonds have shown much less variation in returns but also a significantly lower average. Cash alternatives, also known as money market investments, were the only investments that showed no measurable occurrence of loss, but their average returns were minimal, even compared with bonds.
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Potential for Experiencing Negative Returns in Investment-Grade Bonds, January 1926 to March 2025
This table seeks to put volatility in perspective by suggesting that longer holding periods are historically less likely to experience negative returns, assuming portfolio performance mirrored the performance of the indicated bond market benchmarks.
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Increasing Holding Period Decreases Variability of Returns
This chart shows how indexes that represented stock and bond performance behaved on average during various periods of time from January 1, 1926, through March 31, 2025. Based on these averages, returns were much less variable for longer holding periods than for shorter periods.
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Trading Days With Changes of 1% or More in Domestic Stock Prices
Stock market volatility may unnerve investors who watch it closely. This chart could help put daily volatility in perspective. It shows that while daily moves of 1% or more have been relatively common at some points, there have been significant variations from year to year. Investors should keep this in mind when evaluating daily changes in stock prices.
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Highest and Lowest Returns Over Various Holding Periods Since 1926
This chart shows the performance of indexes representing the range of returns for stocks and bonds during the indicated periods from March 31, 1926, through March 31, 2025.
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Highest and Lowest Returns Over Various Holding Periods Since 1946
This chart shows the performance of indexes representing the range of returns for stocks and bonds during the indicated periods from January 1, 1946, through March 31, 2025.
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Missing Top-Performing Months in the Stock Market
This table illustrates the potential pitfalls of market timing. The table shows the effects of missing the strongest performing months over long holding periods, assuming that investment performance mirrored the performance of the S&P 500 index.
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Stock Returns, Broken Down by Positive and Negative Periods
This chart demonstrates that, historically (since 1926), holding stocks for longer periods has lowered an investor's chances of seeing negative returns, assuming the stock portfolio mirrored the performance of the S&P 500 index and the investor reinvested all distributions.
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Range of Returns for Various Asset Classes, Past 30 Years
This chart shows the range of returns recorded by indexes representing the indicated asset classes during all possible 12-month holding periods from April 1, 1995, through March 31, 2025. While the indexes representing stocks and long-term bonds had peak returns much higher than those representing cash and intermediate-term bonds, they also experienced sharper lows.
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Bonds Might Have Helped
Portfolios that were composed of a mix of stocks and bonds might have fared better than all-stock portfolios during the 2007 to 2009 bear market.
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Risk and Return by Decade
This chart shows how indexes representing stocks have produced different combinations of risk and reward in different decades. Note that the first period is from 1926 to 1939 and the most recent period is from 2000 to March 31, 2025.
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Risk and Return Since 1926
This chart illustrates the historical relationship between risk and return for indexes representing stocks, bonds, cash, 60/40 portfolio, and 40/40/20 portfolio from January 1, 1926, through March 31, 2025.
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Risk and Return, Past 30 Years
This chart demonstrates the historical relationship between risk and return of the indexes representing the indicated asset classes over the 30 years ended March 31, 2025.
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Risk and Return Over 10-Year Periods Since 1926
This chart demonstrates the historical relationship between risk and return for indexes representing various asset classes from January 1, 1926, through March 31, 2025, based on 10-year holding periods.
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Risk and Return Over 10-Year Periods Since 1970
This chart demonstrates the historical relationship between risk and return for indexes representing various asset classes from January 1, 1970, through March 31, 2025, based on 10-year holding periods.
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Average Risk and Return Over 30-Year Periods Since 1926
This chart demonstrates the historical relationship between average risk and average return for indexes representing various asset classes from January 1, 1926, through March 31, 2025, based on all rolling 30-year holding periods.
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Risk and Return Over 30-Year Periods Since 1970
This chart demonstrates the historical relationship between average risk and average return for indexes representing various asset classes from January 1, 1970, through March 31, 2025, based on all rolling 30-year holding periods.
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Highest and Lowest Returns Over Various Holding Periods, Past 30 Years
This chart shows the performance of indexes representing the range of returns for stocks and bonds during the indicated periods (1 year, 3 years, etc.) through March 31, 2025.
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Risk and Return, Past 10 Years
This chart illustrates the historical relationship between risk and return for indexes representing the indicated asset types over the 10-year period ended March 31, 2025.
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Comparative Performance of Stocks and Bonds (Trailing 36-Month Periods)
This chart shows how indexes representing stock and bond performance have outperformed each other at different times during the past 30 years.
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Comparative Performance of Stocks and Bonds (Trailing 60-Month Periods)
This chart shows how indexes representing stock and bond performance have outperformed each other at different times during the past 30 years.
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Performance of All-Stock, All-Bond, and Blended Stock/Bond Portfolios Since 1926
Looking back over investment market history since 1926, just about any investment portfolio has shown positive returns over some 12-month periods and negative returns over others. But for each portfolio, some returns were more likely to have occurred than others. This table shows the distribution of returns that occurred for all-stock, all-bond, and blended stock/bond portfolios, assuming that stock and bond performance mirrored the performance of the indicated benchmarks for each.
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Risk and Return of Single-Asset and Mixed Portfolios Since 1926
This chart compares the risk and return potential associated with investing in stocks or bonds versus investing in portfolios that combine the two asset classes, for the period from January 1, 1926, through March 31, 2025. Based on the performance of the indexes that represent those asset classes, a portfolio that blended both might have had a stronger risk-adjusted return than a portfolio that was composed entirely of one or the other.
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Risk and Return of Single-Asset and Mixed Portfolios, Past 10 Years
This chart compares the risk and return potential associated with investing in a single asset class versus investing in portfolios that combine two asset classes, for the period from April 1, 2015, through March 31, 2025. Based on the performance of the indexes that represent those asset classes, a portfolio that blended both might have had a stronger risk-adjusted return than a portfolio that was composed entirely of one or the other.
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Risk and Return of Single-Asset and Mixed Portfolios, Past 30 Years
This chart compares the risk and return potential associated with investing in stocks or bonds versus investing in portfolios that combine the two asset classes, for the period from April 1, 1995, through March 31, 2025. Based on the performance of the indexes that represent those asset classes, a portfolio that blended both might have had a stronger risk-adjusted return than a portfolio that was composed entirely of one or the other.
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Risk and Return of Single-Asset and Mixed Portfolios, Past 50 Years
This chart compares the risk and return potential associated with investing in stocks or bonds versus investing in portfolios that combine the two asset classes, for the period from April 1, 1975, through March 31, 2025. Based on the performance of the indexes that represent those asset classes, a portfolio that blended both might have had a stronger risk-adjusted return than a portfolio that was composed entirely of one or the other.
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