Free Wealth Management Guide Investing Proceeds From the Sale of Farm or Ranch | Page 6

CD vs. Stock and Bond Indexes
If one is able to tolerate volatility in their investments,
they are more likely to accumulate greater wealth over
time than if they invested in typical bank certificates of
deposit (CDs). The basic concept here is that generally, as
risk increases, so does the potential for higher returns.
The chart below compares two investment scenarios. In
each scenario, $1 million was deposited on October 1st,
2002 and annual distributions of $30,000 were made for
ten years. Scenario One represents investment in certificates of deposit. Scenario Two represents investment in a
basic portfolio allocated 60% to the S&P 500 Stock Index
and 40% to the Barclays Aggregate Bond Index.

From October 2002 through October 2012, the CDs provided a cumulative retu ɸ