What is this chart showing?
This chart shows rolling returns of the S&P 500 index, as well as an 80/20 and 60/40 portfolio of U.S. stocks 10.9% and core bonds over 1-, 5-, 10-, 15-, 20-, 25- and 30-year periods.
Why is it important?
While returns can be volatile over short periods of time, staying the course over the long term in a balanced portfolio can help shrink the range of potential investment outcomes.
Source: Morningstar. 80/20 portfolio = 80% S&P 500 TR and 20% Bloomberg U.S. Aggregate Bond Index TR. 60/40 portfolio = 60% S&P 500 TR and 40% Bloomberg U.S. Aggregate Bond Index TR.
Rolling returns are annualized on a 5,10-,15-,20-,25- and 30-year basis. Using monthly S&P 500 total return and Bloomberg U.S. Aggregate Bond Index data starting in January of 1976, summary return statistics were calculated based on the total number of rolling returns periods existing for each given period of time with a one-month step. For each rolling return period, a range of returns (maximum and minimum) as well as the average return has been calculated to provide a historical reference for how equities and balanced portfolios have performed. Returns >1yr annualized. Past performance is not indicative of future returns.