In recent years, more investors than ever have turned to stocks - or equities, as they are called on Wall Street - to build long-term wealth. They have bought stocks either directly or through planned savings programs such as 401(k) plans or stock purchase programs.
It's easy to see why. Over the past 74 years, the average annual return on stocks is more than twice that of long-term government bonds and more than three times the inflation rate. Over time, stocks have proven to be the best investment for keeping your money growing faster than inflation.
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This chart is for illustrative purposes only and does not represent the performance of any specific investment. Past performance is no guarantee of future results.
Source: Federal Reserve Release 10-yr Treasury bond average annual nominal yields; S&P 500 average annual total return; Inflation: Consumer Price Index (CPI-U), Bureau of Labor Statistics, October 2007. The Consumer Price Index (CPI) is compiled by the Bureau of Labor Statistics. It represents the average change in consumer prices for a fixed market basket of goods and services purchased for consumption by urban wage earners and clerical workers, professional, managerial, and technical workers, the self employed, short-term workers, the unemployed, retirees and others not in the labor force. The S&P Index is an unmanaged index of common stocks that is generally representative of the U.S. stock market as a whole. One cannot invest directly in an index.
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