Quote:
Originally Posted by MandoMan
I hope you wrote this as a joke. It’s a serious problem, because plenty of advisers are suggesting that to keep your money safe, put a big chunk in the money market and a big chunk in bonds. I like the T. Rowe Price New Horizons Fund. I’ve averaged over 15% a year over the past five years. After two years, if the market dropped a breathtaking 30% and stayed there, I’d be where your money market funds would still be. And if it dropped 30% tomorrow and stayed there, I’d still have 60% more than I had in 2016 and almost 60% more than your money market account would have.
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Not a joke. But, yes, if I had all of my money invested in a small company growth stock fund like the one you mentioned, I would have made more money over the years. Actually, the New Horizons fund has a 10-year average annual total return of about 23 percent, compared to 17 percent for the S&P 500 index. But, it is not an apples to apples comparison to compare a high risk, 100 percent growth stock portfolio to a conservative, balanced portfolio of stocks, bonds, and cash. I would not feel comfortable with all of my assets invested in any type of stocks. My point is that the cash and bond markets are being skewed by the Federal Reserve by not allowing interest rates to rise and fall based on market conditions like inflation.