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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Tuesday, June 06, 2006

Long-Term Investing

If you look at charts comparing the growth of small company stocks v. large company stocks the results are interesting. If you invested $1 on December 31, 1925 through December 31, 2000 small company stocks outperformed large company stocks. They follow a similar path along those 75 years, but the ending wealth for small companies is $6,402 with an average return of 12.4%. While large companies had an average return of 11%, but the ending wealth is at $2,587. Greater volitility followed the small stocks and it was displayed by higher peaks and lower valleys. If you want to maximize portfolio growth over the long term you have to take on volitility in your portfolio.

1 Comments:

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