WHAT HAS BEEN THE HISTORICAL RATE OF
RETURN?
In the 1970's, oil stock helped create sky-high inflation
that generally made
tangible assets a winning investment. Then in the 1980's, low
inflation and declining
interest rates put many stocks and bonds on top. The 1990's are
still an open question.
The constant shifting in the rate of return of various asset
categories is clearly
reflected in the table below, using data supplied from Salomon
Brothers. This
investment-banking firm compiles an index for each of the 12
different asset categories,
ranging from stocks to Chinese ceramics. Salomon Brothers
monitors each asset category's
performance over time, compounding the rate of return each year.
The rates of return listed are before taxes, and are ranked
here against the Consumer
Price Index over the past 20, 10, and 5 years. They are not meant
to predict future
performance.
| |
20 Year
Annual Return |
10 Year
Annual Return |
5 Year
Annual Return |
| |
|
|
|
Stocks
|
12.2% |
14.8% |
15.1% |
Bonds
|
9.8% |
13.2
% |
13.1% |
Stamps
|
9.6% |
(1.7)
% |
0.5% |
3 Mo. T Bills
|
8.8% |
7.3
% |
6.6% |
Diamonds
|
8.5
% |
5.9
% |
4.3% |
Oil |
7.5
% |
(4.7)
% |
1.7% |
Gold |
6.9
% |
(1.0)% |
(4.2)% |
| |
|
|
|
Housing
|
6.7
% |
4.4
% |
3.7% |
Consumer
Price Index |
6.1
% |
3.8% |
4.2% |
Chinese
Ceramics |
5.8
% |
7.6
% |
9.8% |
U.S. Farmland
|
5.4
% |
(1.2)
% |
2.1% |
Foreign
Exchange |
3.4
% |
5.6% |
1.7% |
Silver
|
2.7
% |
(10.1)% |
(8.5)% |
Sound planning and investment
management is required to
maintain a diversified investment portfolio that will keep pace
with inflation on an
after-tax basis. Source: Salomon Brothers 1993.
