https://totalrealreturns.com/ All charts and data on this site are CPI-U inflation-adjusted and with dividends reinvested. (Why?) Total Real Returns [ ] Asset Classes: Stocks vs. Bonds vs. Cash 1987-08-03 to 2022-07-12 Trendline Worst Current Drawdown Drawdown Mutual Fund Vanguard 500 +6.63%/yr VFINX Index Fund Investor Shares (R^2= -58.6% -24.1% 0.870) Mutual Fund Vanguard Total +3.05%/yr VBMFX Bond Market Index Fund (R^2= -25.0% -23.6% Investor Shares 0.933) -2.35%/yr USDOLLAR Currency United States Dollar (R^2= -92.8% -92.8% 0.985) --------------------------------------------------------------------- --------------------------------------------------------------------- Understanding the Total Real Returns chart The goal of investing is to preserve and ideally grow wealth, deferring some consumption today to provide for future consumption later. The Total Real Returns chart demonstrates this more clearly than conventional (nominal-dollar, price-only) stock charts, because: 1. we include the effects of inflation-diminished purchasing power, and 2. we include the effects of reinvesting dividends from the initial investment. The y-axis is labeled Purchasing Power (2022 USD), and it represents what economists call inflation-adjusted or constant dollars. It has been adjusted for inflation using the monthly Consumer Price Index data published by the U.S. Bureau of Labor Statistics. However, it might be simpler to understand the y-axis if we labeled it Baguettes. Consider the red line, VFINX. At the left side of the chart, on 1987-08-03, suppose we bought 36.92 Baguettes worth of VFINX, reinvesting dividends over the years. On the right side of the chart on 2022-07-12, that investment would today be able to buy you much more: 352.65 Baguettes. In contrast, consider the green line, USDOLLAR, which represents paper dollar bills, or a zero-interest checking account. If on 1987-08-03 you put 2.602 Baguettes worth of cash into a checking account, today on 2022-07-12 you could now use this cash to buy only 1.0 Baguettes. The absolute number of Baguettes is not important: each total real price series has simply been scaled to match its current nominal value today. The absolute price per share isn't important because you can buy as few or many shares of each asset as you'd like. The relative growth or decline indicates how successfully one could have used each of these assets to store wealth on 1987-08-03 to be consumed later on 2022-07-12. In the case of VFINX, you'd have +855.2% Baguettes over the time period shown, while if you held cash (USDOLLAR), you'd have -61.6% Baguettes. --------------------------------------------------------------------- Why these specific assets? On this page, we are only displaying VFINX for stocks and VBMFX for bonds because these are older mutual funds with lots of historical data available. They are probably not the funds you should consider buying today, for many reasons, including: * For Vanguard specifically, there are now "Admiral Shares" that have lower expense ratios than these older "Investor Shares". Examples: VFIAX VBTLX * You might consider a Total Stock Market Fund, which has broader diversification than an S&P 500 Index fund. Example: VTSAX * You might consider buying ETFs (Exchange-Traded Funds) instead of Mutual Funds. Example: VTI * You might consider buying Total World Stock funds, instead of US-only funds. Examples: VT VTWAX * If you use a different brokerage, you may consider buying their offerings. Examples: FSKAX SCHB There are more considerations and we are not recommending any funds or securities. We highly recommend the Bogleheads Wiki as an outstanding educational resource to get started in self-serve investing. The Bogleheads Forum is an excellent community to ask your questions. --------------------------------------------------------------------- Explore Search by symbol [ ] [Plot] Enter one or more symbols, separated by commas. 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