Question
Historically the S&P 500 Stock Index has returned about 8% a year but returns are very uneven as recent experience has reminded us - the
Historically the S&P 500 Stock Index has returned about 8% a year but returns are very uneven as recent experience has reminded us - the INDEX declined by more than 50% from its peak in 2007 and took 7 years to attain that peak level again. This year (2019) the S & P 500 Index has gained about 10% through todays date after declining almost 10% for last year( 2018). It has since recovered. In contrast a typical Money Market Fund has returned about 2% a year with minimal fluctuation. Given this, evaluate the following
b) How risky would it be if you planned to use this S&P 500 Index Fund as the major component of your retirement funds, 40 years from now? Briefly discuss your perception of risk in this decision, given your objective.
Very low Very high
risk ____ ____ ____ ____ ____ ____ ____ risk
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Briefly explain your decision: (2 points)
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