Chart of the Week: Investment Returns By Decade

Jan 14, 2020
Chart of the Week, Investing, Index Funds

I came across this cool gif on the Irrelevant Investor blog. Lots of percentages here which make this an interesting one for math teachers too! 

Be sure to click on the image below to experience the GIF: 


Important: Given the multitude of asset classes here with some familiar and some unfamiliar, you may want to just focus on two bond proxies (5 Year U.S. Treasuries and Long-Term Corporate Bonds) and two stock proxies (S&P 500 and NASDAQ). Of course, if you cover other asset classes in your Investing unit you can expand beyond those four. 

Here is a description of the other asset classes: 

  • 5-Year U.S. Treasuries (Bonds)
  • Long-Term Corporate Bonds
  • Bloomberg Commodity Index (commodities like oil, gold, silver)
  • S&P 500 (stock fund consisting of 500 large U.S. companies)
  • NASDAQ (index made up fo companies listed on the NASDAQ market, lots of smaller companies and large percentage of technology companies)
  • Russell 2000 (index made up of smaller U.S. companies)
  • Russell 3000 Value (index made up of both large and small U.S. based companies with an emphasis on lower-growth companies)
  • U.S. REIT - Real Estate Investment Trust
  • EAFE - non-U.S. stocks in Europe, Australasia and Far East 
  • Emerging Markets - invests in companies in countries that are considered "emerging"such as Brazil, Russia, India and China

Click on the image above to see the gif cycle through four decades (80s, 90s, 00s and 10s) of investing returns for these various assets. The risk profile of the specific assets moves from less risky (U.S. Treasuries and Corporate bonds) to more risky (Emerging Markets) as you move from left to right. 

Watching the gif cycle through several times, you may start to note some patterns. Here are some questions to get your students thinking:

  • Jot down at least three patterns you notice as you watch the gif cycle through the decades. You may have to watch for a minute or two to see these patterns.
  • How do the bond investments perform compare to the stock investments?
    • In most decades, which performs better, stocks (S&P 500) or bonds (5 Year Treasury)?
  • What was the worst decade for investing in S&P 500 and NASDAQ?
    • How did the 5 Year Treasury Bonds and Long-Term Corporate Bonds perform over that same decade?
    • Would it have been valuable in that decade to own both stocks AND bonds? 
  • What was the best decade to invest in the NASDAQ index?
    • How did it perform the next decade AFTER their strong performance?
    • How much would an investor who invested $1,000 at the beginning of the best decade have had at the end of that "best decade"?
  • Your friend says over the long-run the stock market tends to go down. Does the evidence in this chart support this? 


Looking for more charts and graphs, be sure to investigate NGPF's Data Crunch resource. 



About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.