Why Asset Allocation Matters
The difference between a savings account and an index fund over 20+ years is staggering. $50,000 at 4.5% becomes $120,000. The same amount at 10% becomes $336,000. That's not a small difference — it's the difference between a comfortable retirement and struggling.
Risk and return are linked
Higher returns come with higher volatility. The S&P 500 averages 10% annually, but individual years range from -37% (2008) to +31% (2019). The key is time horizon — over 20+ years, the stock market has never lost money. But over 1-2 years, it can lose significantly.
Don't forget inflation
Toggle "Real Returns" above to see the inflation-adjusted picture. A 4.5% savings account with 3% inflation gives you just 1.5% real growth. That's why keeping all your money in savings — while safe — means you're barely keeping up with the rising cost of living.