Asset values have grown over time

Sources: © 2021 – Morningstar Direct, All Rights Reserved1, and Wells Fargo Investment Institute. Monthly data from January 1, 1926 to September 30, 2021. Small-company stocks: IA SBBI U.S. Small Stock Index is a custom index designed to measure the performance of small-capitalization U.S. stocks. Large-company stocks: S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. Government bonds: IA SBBI U.S. Long-Term Government Bond Index is a custom index designed to measure the performance of long-term U.S. government bonds. Treasury bills: IA SBBI U.S. 30-Day Treasury Bill Index is a custom index designed to measure the performance of U.S. Treasury bills maturing in 0 to 30 days. Inflation: IA SBBI U.S. Inflation Index is a custom unmanaged index designed to track the U.S. inflation rate. For illustrative purposes only. Index returns do not represent investment performance or the results of actual trading. Index returns reflect general market results, assume the reinvestment of dividends and other distributions, and do not reflect deduction for fees, expenses or taxes applicable to an actual investment. An index is unmanaged and not available for direct investment. Hypothetical and past performance is no guarantee of future results.

Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions. Small-cap stocks are generally more volatile, subject to greater risks and are less liquid than large company stocks. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. Government bonds are guaranteed as to payment of principal and interest if held to maturity and are subject to interest rate risk.

1. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Key Takeaways

  • Since 1926, riskier assets have outperformed less risky assets.
  • U.S. Treasury bills (T-bills) have tracked inflation fairly closely over this time frame. More recently, T-bill yields have been lower than inflation.