April 8, 2025
Over the last decade, passive investing has been a winning strategy. Low interest rates, steady economic growth, and strong corporate earnings made it easy to "set it and forget it." But what happens when inflation eats away at those returns?
History provides an answer. During the 1960s and 1970s, the stock market’s annualized return was just 1.06% if you didn’t reinvest dividends. Even with reinvested dividends, returns were modest compared to the inflation rate.
The message is clear for investors: Passive investing alone may not be enough in an inflationary environment. Instead, strategies like:
Investing in dividend-paying stocks to boost returns.
Tactical adjustments to respond to changing market conditions.
Diversification into tangible assets that tend to perform well during inflationary periods.
The economy is shifting, and investors need to adapt. If you want to ensure your portfolio is positioned correctly, check out our full breakdown:
Outlook 2025—Lessons from the 1960s-70s for Today’s Investors
DISCLOSURE:
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A diversified portfolio does not assure a profit or protect against loss in a declining market. Past performance is not an indication or guarantee of future results. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.