On 2010-01-04, Joseph Gwinn wrote:
In article ,
Ignoramus7943 wrote:

On 2010-01-03, Joseph Gwinn wrote:
On Sat, 02 Jan 2010 15:38:10 -0600, Ignoramus16758
wrote:

My personal investment results from my investments that I had (and
kept throughout) from year 2000, are roughly 90.4% total cumulative
return. This does not include any additional investments that I made
with savings from years after January 2000. Only the investments that
I had in the beginning of the decade, which I still happen to be
carrying.

A 90.4% cumulative return over the period 2000-2009 inclusive (money
almost doubled in 10 years) is equivalent to a compound interest of the
tenth root of 1.94, or 1.0685, or 6.9% growth per annum. That's pretty
solid, but it would be useful to compare this with the aggregate return
of treasury bonds, corrected for inflation.

You actually do not need to correct for inflation.

Sure you do if you want to see the true growth in wealth.

The question above was comparing returns for the same period, with one
another.

i

It's also useful for comparing stocks with bonds.

One example is the old rule of thumb that the no-risk interest rate
(which usually means US Treasury Bills) exceeds the rate of inflation by
approximately 1%.


With 10 year bonds, I would suppose the return would be around 5% or
so, but more taxable. Just making a guess.

It depends on your marginal tax rate (the tax on the next dollar of
income). If your tax bracket is above some number, municipal bonds
(munis) make a lot of sense, because munis are exempt from Federal
taxes, and from state taxes in the state of issue. If one buys munis
issued by one's state of residence, the interest is totally tax free.

For the record, while the stock market gets all the media attention, the
total value of the muni bond market is something like ten times larger.

By the way, Section R of today's (4 Jan 10) issue of The Wall Street
Journal covers sector-by-sector yields over the last year, and over the
last decade, in some detail. The clear winner, with 279.6% gain in ten
years, is Gold (COMEX Futures).

Joe Gwinn