Why Invest in Stocks? Some Profitable Comparisons

Based on this study, we can say with confidence that over a lifetime of investing, an investor will reap a total annual return of 10% or more.

If you compare this with the amount you could earn by owning CDs, annuities, government bonds, or any other conservative investment, the difference is considerable.

Let's see how that difference adds up.

Suppose you invested $25,000 in a list of common stocks at the age of 40, and your portfolio built up at a 10% compound annual rate. By the time you reached 65, your common stock nest egg would be worth $270,868.

Now, let's say you had invested your money in government bonds, yielding 6%. The same $25,000 would be worth only $107,297, which is a difference of $163,571. Neither of these calculations has accounted for income taxes or brokerage commissions.

Now, let's look at the timid soul who invested $25,000 in CDs at age 40 and averaged a return of 4%. By age 65, that investment would be worth a paltry $66,646.


Read also:
Why Invest in Stocks?
Why Invest in Stocks? Look at the Facts
Why Invest in Stocks? Investing for the Long Term
Why Invest in Stocks? Some Profitable Comparisons
Why Invest in Stocks? Why Doesn't Everyone Buy Common Stocks?
Why Invest in Stocks? An Example in Practice