A Lump Sum Scenario

I've published another version of the spreadsheet, this time starting in 1982 with a start date of 1982, with a flat initial investment of $100,000.

Here is the link.  https://docs.google.com/spreadsheet/pub?key=0AmMlf3bsV3rFdHZ2UzdsRUZ2cmRlS3dBUHNWSUVQWUE&output=html

1982 allows for a full investment cycle (30 years).  It doesn't hurt that 1982 was a great year to start a bond portfolio (rates were historically high).  Look and you'll wish you'd invested this way a long time ago.

Why did I choose 1982 for this lump-sum scenario?  I ran it as a comparison to Charles Allmon Growth Investor 30-year results.  He just retired, and Alan Abelson of Barron's praised him for beating the S&P 500 index yearly compounded return of 8.4% by 2/10ths of a point!  He also praised the high cash levels and low volatility of Allmon's portfolio. Well, folks, my comparable bond $100,000 portfolio compounds over the same 30 years at 12.5% annually.  It's in bonds!  It gushes cash!  Shouldn't Abelson be knocking at my door?

Why is the final yield figure of 7.86% so much lower than the 12.5 percent I just cited?  Because it's an average yield, computed on a much larger average investment ($374,636).  The average investment includes reinvested income.  So, it's a matter of perspective.  The first is a return on initial investment, the second a return on a weighted average investment.