A Timely Reminder Of Why You Take Stock Risk 

Published Friday, October 7, 2022 at: 7:08 PM EDT

The equity risk premium, a concept in modern financial theory illustrated here, quantifies the premium stocks annually averaged in the 20 years ended September 31, 2022. Stocks, as measured by the Standard & Poor’s 500, averaged a +9.8% annual return in the last 20 years — more than seven times the +1.2% annual return on the risk-free 90-day U.S Treasury bill in the same 20-year period.  T-bills are considered a riskless investment. That’s because they’re backed by the full faith and credit of the United States Government. In contrast, the value of the S&P 500 index is subject to ups and downs....

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This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.

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