The stock and bond markets have offered investors rewarding returns for the past 100 years, or what is considered the “long run”. However, the long run may not be “long enough” for many investors. An individual investor has a finite period to grow investment assets, normally starting from age 35 to 65. Depending on the historical period the investor lives in, the ultimate returns on investment can be dramatically different than expectations. This is especially true if the investment growth period in question is 20 years or less. Investors in stock or equities have learned this truth if their window of opportunity was from 1929–1949 or 1964–1984. Investors in bonds also do not always escape the dreaded window of time as well. If interest rates are extremely low in the beginning time period, like 1948, then returns on bonds can also be substantially lower than the longterm averages. This problem is not just associated with stocks and bonds. Gold and commodities have suffered elongated periods of stagnated returns. Buying gold at its absolute peak in 1980 ($675) and holding it for 20 years ($284 in 2000) sure turned out to be a losing long term investment. Real estate does not always go up as several pundits argued forcefully in the mid-2000s. I expect that the real estate market will surely stagnate for another decade at a minimum based on historical precedent.

The fact is that all investment categories, or asset classes, are highly volatile over time. The most important ...

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