Net-Net-Net

Often some of the best material I receive to help me educate clients comes from vendor publications. A recent example is Thornburg’s “A Study of Real Real Returns.”

I’m often reminding clients that all that counts is how much they keep net (of expenses); net (of taxes) and net (of inflation) and the Thornburg study provided the following example for a hypothetical $100 invested in the S&P 500 for 30 years from 12/31/1979 – 12/31/2009. Here’s what they found:

  Percentage $
Nominal Return 11.24% $2,440
After Expenses 10.68% $2,101
After Dividend Taxes 9.28% $1,432
After Capital Gains Taxes 8.9% $1,292
Net-Net-Net (after inflation) 5.21% $459

Net-Net-Net makes a BIG difference.

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