John Auters writer for the Financial Times shows the actual performances (which offset the effect of inflation) in assets available for investment in the United States from 1900 to 2009.
In this interesting chart we can see how the equity market shares or assets that are more historical yields have offered a 6% year on year. Although it is a very good performance in terms of dollars, it is important to note that this rate corresponds to the change in share price plus reinvestment of dividends to be paid over time. Moreover, if we look at the gray line of the chart, notice the simple appreciation in stock price, has they have surrendered so interannual just 1.7%. Here the importance of the reinvestment of dividends and the power of compound interest. The red line shows the real yield on bonds or fixed income market, which includes everything that is corporate debt, with a 2.1%, and finally the American Treasury notes up to a 1% real return, which Obviously by being classified as instruments of lower probability of default in the world.
From this graph we can obtain three key findings.
• The long-term investors perform better in terms of performance and decrease the volatility of their investments.
• The need to reinvest the dividends received by our assets to achieve optimal results.
• The long term has had the ability to overcome all the crises of the last century as much of this.
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