Asset Allocation For Dummies®

Chapter 17. Ten Asset Classes and Subclasses and Their Historical Rates of Return

In This Chapter

• Reviewing 20 years of return data for selected asset classes

• Knowing what to do with this information

This chapter is chock-full of raw data — but don't let that scare you! When it comes to investing, raw data is very useful stuff. In fact, it's critical when it comes time for you to make your investment plan and hammer out your asset allocation. Knowing how the various asset classes and subclasses behave over time will help you make informed decisions on the mix of assets that best suits your investment goals.

Use this chapter as a handy reference. Flip back here when you're reading (or rereading) about risk and return (Chapter 2), choosing asset classes and subclasses (Chapter 3), deciding on the right proportions among asset classes (Chapter 4), creating your allocation plan (Chapter 8), or buying securities (Chapter 9).

Before you check out the return data for each of the ten asset classes and subclasses covered in this chapter, have a look at Table 17-1, which lists all those categories and how they're related, as well as the indexes we use to measure the total returns for each class.

The figures in this chapter show the annual total returns for each of the ten selected assets in Table 17-1 over the 20-year period from 1988 through 2007. Looking at an asset's performance over time gives you a pretty good snapshot of the magnitude of the annual total returns themselves, as well as the ...