• 👉 Work With Me
• Fact #1: QQQ Performance | Peter Lynch 1965 Stat
• Fact #2: Deutsche Bank Long-Term Asset Study | The Market Doesn’t Deliver Average Returns
• Fact #3: DoubleLine – Treasury Portfolio Backtest | BILDX vs. VGIT
• Fact #4: The Optimized Portfolio | Did Declining Rates Really Matter?
• Fact #5: Al Capone History | The U.S. vs. Capone | Taxes on Illegal Income | IRS Whistleblower Program
• Fact #6: Okinawa and Ikigai | Sense of Purpose and Longevity Study

Today, we’re stepping away from the spreadsheets, tax brackets, and retirement planning deep dives to have a little fun.

As many of you know, every so often, I like to collect a handful of surprising facts about the markets, investing, taxes, and retirement — the kinds of facts that make you pause, rethink a common assumption, or look at a familiar topic from a completely different angle.

And that’s exactly what we’re doing today.

I’m sharing six facts that challenge conventional wisdom.

A few are counterintuitive. One might make you feel a little better about investing at the wrong time. Another may change how you think about the role of bonds in your portfolio. And at least one involves a famous gangster, the IRS, and one of the stranger reminders that taxes touch almost everything.

By the end of today’s episode, my hope is that you’ll feel a little more confident in the patient, disciplined, evidence-based approach we talk about so often here on the show.

And if nothing else, you’ll have a few new stats and stories to share the next time markets, taxes, or retirement come up in conversation.

Welcome to another episode of the Stay Wealthy Retirement Show. I’m your host, Taylor Schulte, and every week I cover the most important financial topics to help you stay wealthy in retirement. Ok, onto today’s episode.

Fun Fact #1

Let’s start with a statistic that speaks directly to one of the most common fears I hear from investors: the fear of putting money to work at exactly the wrong time.

Imagine it’s March 2000, the peak of the dot-com bubble. Technology stocks are everywhere. Everyone is talking about them. And you, with almost perfect bad luck, invest a large sum into the Nasdaq 100 on the exact day it tops out.

You could hardly have picked a worse moment. In fact, over the next two and a half years, the index would lose roughly 80% of its value, and to make matters worse, it would take about 15 years just to climb back to where you started.

That is certainly painful—fifteen years is a long time to wait just to get back to even. But here’s the surprising part: a disciplined investor who invested on that worst possible day, held through the 80% decline, waited through the long recovery, and stayed invested through June 2026 would have ended up earning roughly 8% per year.

Think about that. The single worst entry point of one of the biggest bubbles in modern market history still produced a solid long-term return for the investor who stayed the course.

Now, there are two reasons that story ends better than it begins. The first is obvious, which is time. When money has decades to work, compounding can eventually overcome even a terrible starting point.

The second is business growth. In other words, the companies inside the index didn’t stand still. They kept innovating, earning, and compounding, and over time, the fundamentals caught up with—and eventually moved far beyond—the price investors paid in 2000.

Now, the lesson here is not that timing never matters, or that you should buy anything at any price. The lesson is to avoid putting all your eggs in one basket, chasing investment fads, and assuming that bad timing is the biggest risk. Because, for long-term investors, the bigger risk is often sitting on the sidelines indefinitely, waiting for the perfect moment that never comes. Or investing, watching the market fall, and selling somewhere in that 80% drawdown, locking in losses for good.

This also reminds me of a stat I’ve shared before from Peter Lynch, which is a likely a little more relateable. Lynch found that if you invested at the single highest point of the S&P 500 every year from 1965 to 1995, your average return was 10.6% per year. I’ll say that again. If you invested at the single highest point of the S&P 500 every year from 1965 to 1995, your average return was 10.6% per year. If you somehow invested at the lowest point every year, your return was 11.7%. In other words, the gap between the world’s unluckiest market timer and a flawless one was barely more than one percentage point per year.

Now, one important caveat for those of you in or near retirement: this is a story about long time horizons. If you’re drawing income from your portfolio, you don’t have 15 years to wait out a recovery, and the sequence of your returns matters enormously. That’s why retirees need more than a single stock asset class. They need a globally diversified portfolio, paired with high-quality bonds and a cash war chest they can lean on when markets fall.

Staying invested is what rescues the worst-timed dollar, and having a buffer is what allows you to stay invested.

Fun Fact #2

Now, if the first fact was about the danger of trying to time your entry into the market, this next one is about how poorly most of us judge what a “normal” year in the market actually looks like.

If I asked you what a typical year in the stock market delivers, most people would say something close to 10%. That’s the number we hear most often as the markets average return, and the number often used in long-term projections.

But the market almost never delivers average. In fact, according to Deutsche Bank’s Long-Term Asset Return Study, which looks at 200 years of market history, nearly 40% of years have produced a total return for the S&P 500 above 20%.

Most investors think of a 20%-plus year as rare or extraordinary, but historically, years like that have happened in nearly two out of every five years.

So, how can 20%-plus years be that common when the long-term average is closer to 10%? Well, because the average is what’s left after you blend together a lot of extremes.

As I’ve discussed before on the show, stock market returns are lumpy. You get a meaningful number of huge up years, a smaller number of painful down years, and surprisingly few years that land anywhere near average.

The “10% per year” figure is not what investors typically experience in any single year. It’s the smooth-sounding summary of a very uneven ride.

And this connects directly to a stat I shared in the last Fun Facts episode: the market has produced an annual return within 2% of its 10% average in only 4 of the last 97 years. Four years out of nearly a century.

Put those two facts together and the message is clear: “average” is mostly a myth. The market is almost never normal. And since you can’t know in advance which years will be the 20%-plus years, waiting in cash for a “better time” can be far more costly than it feels, because those big, unpredictable years are often the biggest drivers of long-term growth. If you miss enough of them, your returns don’t just suffer a little—they can fall dramatically behind.

As noted in the study, across two centuries of data and dozens of countries, investors have generally been rewarded for taking risk and staying invested long enough to compound their returns.

But that reward only shows up if you’re actually in the market to receive it.

And this matters just as much in retirement. Over a 30 or 40+ year retirement, the growth that helps you keep up with inflation and avoid outliving your money often comes from those big, unpredictable, better-than-average years. You don’t have to predict them, you just have to be invested when they arrive.

Fun Fact #3

Ok, speaking of predictions, for our third fun fact, let’s give you an impossible advantage to predict the future and see how much it actually helps.

Imagine it’s 10 years ago, and I hand you a working crystal ball. You use it to look into the future and identify, in advance, an actively managed bond fund that will go on to rank in the top 1% of its category over the next decade.

The fund, in this case, was the DoubleLine Select Income Fund, ticker BILDX.

So you buy it and use it as the bond portion of your portfolio: 80% in the Vanguard Total World Stock Fund, and 20% in this future star bond fund.

Ten years later, the crystal ball was right. The fund did exactly what you hoped it would do. In fact, on its own, it outperformed the Vanguard Intermediate-Term Treasury Bond Fund by about 15%.

That sounds like a big win. But here’s where it gets interesting.

Remember, this star bond fund was only 20% of the portfolio. The other 80% was invested in global stocks. And once you zoom out and look at the performance of the full diversified portfolio, the advantage nearly disappears. Here’s what happened over the past decade.

The portfolio with the top performing doubleline bond fund returned 10.4% per year. The portfolio with the boring, intermediate Treasury bond fund (VGIT) returned 10.2% per year.

So yes, the portfolio with the doubleline bond fund still technically won. But the difference was only about 0.20% per year. Plus, it came with slightly more volatility. When you measure how much return you earned for the amount of volatility you had to endure, the portfolio containing the doubleline bond fund actually looked a little worse.

So, to summarize, you had a perfect crystal ball. You picked a top-1% bond fund 10 years in advance, which is something no real investor can reliably do. And after adjusting for risk, your reward was basically nothing.

But here’s perhaps the more interesting point when you take the analysis one step further. That tiny bit of extra return could have been captured more simply by just owning a little more in stocks.

Specifically, in the third test portfolio, we shifted from 80% stocks and 20% intermediate Treasuries to 84% stocks and 16% treasury bonds. That slightly more aggressive mix earned more than the portfolio with the doubleline bond fund, had a better risk-adjusted score, and would have cost less in fees.

So why did a genuinely great bond fund add so little? Because many high-performing bond funds earn their extra return by taking more credit risk. In plain English, they lend to borrowers who are less financially secure. And that can work well for long stretches of time. But credit risk has an inconvenient habit of showing up when stocks are also falling.

So instead of cushioning the portfolio when stocks decline, that bond fund can start behaving more like stocks at the exact moment you need your bonds to behave like bonds. And in an equity-heavy portfolio, that matters. You didn’t really diversify the risk, you just added a little more of a risk you already had.

That’s why you have to be careful evaluating investments in isolation. The bond fund may look excellent on its own compared to boring US treasuries. But your portfolio is not a collection of standalone investments — it’s a system, working together. And each holding has to be judged by how it behaves alongside everything else you own.

For most retirement investors, your bond portfolio doesn’t need to be fancy. It needs to be high-quality, low-cost, and dependable. Let the bond side do its job. Then take your risk deliberately on the stock side, where the long-term reward for risk has historically been much more compelling.

Fun Fact #4

Now, all of that might have left you thinking of bonds as a drag—something you tolerate for safety, at the cost of returns. But that’s not necessarily true, and for our next fun fact, I actually want to flip that idea around.

Because here’s what surprises almost everyone: over the last 50 years, owning the right bonds didn’t just make diversified portfolios safer than an all-stock stock portfolio, they actually created more wealth.

Let me share some actual numbers from an analysis published by The Optimized Portfolio blog. Their actual study used larger dollar amounts, so I’m going to scale the numbers down here to make the takeaway easier to picture, while keeping the returns and drawdowns the same.

Imagine an investor who contributed steadily to their portfolio over the past five decades.

If they had gone all-in on a 100% stock portfolio, their account would have grown to about $1.6 million, earning roughly 10.0% per year. That’s a great result, but along the way, they also would have had to sit through a gut-wrenching decline of about 58%.

Now compare that to a portfolio with 70% stocks and 30% high-quality U.S. Treasury bonds. You would naturally assume it earned less because it owned fewer stocks and took less risk. But it didn’t.

Those same contributions grew to about $2.4 million — roughly $800,000 more than the all-stock portfolio — with an annual return of about 10.7%. And the worst decline was about 42%, not 58%.

So in this particular period, adding high-quality bonds didn’t just make the ride smoother. It also led to more money in the end.

So how can adding a lower-returning asset class to a portfolio increase your long-term return?

Two reasons. The first is volatility drag; losses hurt more than equal gains help. For example, if you lose 50%, you need a 100% gain just to get back to even.

By cushioning the deepest declines, bonds keep the portfolio from falling into holes that take years to climb out of. And over time, a smoother path can compound into a higher ending value.

The second reason is rebalancing. When you own both stocks and bonds, and you rebalance along the way, you’re forced to do one of the hardest things in investing: trim what has held up well and buy more of what has fallen. In 2008, that meant selling bonds to buy stocks near the bottom—and then benefiting as stocks recovered.

Now, a sharp listener might say, “Sure, Taylor, but bonds had a once-in-a-generation tailwind. Interest rates fell for decades, and that pushed bond prices higher.”

And that’s a fair challenge. But a deep-dive paper from Newfound Research found that falling rates explained only about a quarter of bonds’ total returns over the three decades studied. The bigger driver was much simpler: bonds paid healthy interest along the way. Put simply, their regular interest income was roughly three times as impactful as falling rates.

So yes, declining rates helped, but they were not the whole story. And this brings us right back to the previous fact, just from the opposite direction.

In Fun Fact #3, I shared that a top-1% bond fund added almost nothing to a portfolio. Here, a plain, 70% stock / 30% treasury portfolio outperformed a 100% stock portfolio outright. Same asset class, opposite conclusion. And that proves the point one final time: you cannot judge any investment in isolation.

Stocks and bonds don’t just sit next to each other in a portfolio—they interact. And that interaction, more than any single holding, determines how much growth, income, and stability your portfolio can actually deliver.

Fun Fact #5

Ok, let’s lighten things up with one of the more entertaining tax stories in American history for Fun Fact #5.

As many listeners may know, Al Capone was once the most feared gangster in America, often referred to as Public Enemy Number One. And at the height of his career, or empire, whatever you want to call it, he was making a fortune from bootlegging, gambling, and plenty of things that were far worse.

Despite all of this, Capone was never convicted of bootlegging. He was never convicted of murder. And he was never convicted of the violent crimes that made him infamous.

So what finally brought him down? Our favorite topic here on the show, taxes!

Capone reportedly believed the government couldn’t tax illegal income. But in 1931, federal prosecutors proved otherwise. He was ultimately convicted of tax evasion, sentenced to 11 years in prison, and ordered to pay back taxes, interest, fines, and court costs.

So, the most dangerous man in America wasn’t brought down by a rival gang or convicted of violent crimes – he was brought down by the tax code.

And here’s something funny you may have noticed by studying your tax return – the IRS, to this day, requires income from illegal activity to be reported on your tax return. It generally goes on Schedule 1 as “other income,” unless it’s treated as self-employment income and reported on Schedule C. In other words, the IRS’s position is pretty simple: we may not approve of how you made the money, but we still expect you to report it.

And while we’re in strange-but-true IRS territory, here’s one more to share with you: the IRS may actually pay you for reporting major tax fraud. Through its Whistleblower Program, eligible informants can generally receive 15% to 30% of what the IRS recovers. So if there are any Al Capones in your life, reporting them might not just be the right thing to do, it could also create a little extra income in retirement.

Fun Fact #6

Ok, for our final fact, I want to leave the markets behind completely. We’ve spent most of this episode talking about how to grow and invest your money, but this last one is about what all that money is actually for.

There’s a small island in southern Japan called Okinawa — it’s one of the world’s so-called “Blue Zones,” places known for unusually long-lived populations. And one of the ideas that has long stood out in Okinawan culture is known as Ikigai (ee-key-guy) — loosely translated as your reason for being, the thing that gets you out of bed in the morning.

In traditional Okinawa, older adults didn’t just step out of life when they stopped working. They kept roles. They stayed connected. They remained useful to their families, friends, and communities well into old age. And for a long time, Okinawa was one of the most remarkable longevity stories in the world, with an unusually high concentration of people living past 100.

However, many have reported in recent decades that as western diets and more sedentary habits have spread, especially after World War II, younger generations in Okinawa lost much of that longevity edge. Which highlights that purpose is powerful, but it isn’t magic, and it can’t outrun poor health habits forever.

That said, the research on purpose does keep getting stronger. In fact, one large study of nearly 13,000 Americans over age 50 found that people with the strongest sense of purpose had a 46% lower risk of dying over the study period. Other research has linked a strong sense of purpose with lower dementia risk, and in some studies, that protective effect appears especially meaningful later in life, when work is no longer the main source of identity, structure, and usefulness.

And that’s why I wanted to end today’s episode here. We spend years — sometimes decades — obsessing over the financial machinery of retirement: the withdrawal rate, the tax strategy, the Social Security decision, the portfolio allocation.

And all of that absolutely matters. But the deeper question is the one Okinawa puts right in front of us:

Once you’ve built the financial freedom to stop working, what gives you a reason to get up in the morning? Because the best retirement plan isn’t just about having enough money to leave work. It’s about having enough purpose to keep living fully.

Bottom Line

If there’s one conclusion to draw from all of this, it’s that sound investing rarely comes down to a clever insight or a perfectly timed decision. More often, it’s the result of a disciplined, patient approach — staying diversified, keeping costs and taxes low, and resisting the urge to outguess the market.

But a well-built portfolio is only part of the picture. Ultimately, it’s a tool. A tool designed to support a long, healthy, and meaningful retirement.

The most successful retirees I’ve spoken to and worked with understand both sides of that equation. They care about making smart financial decisions, but they also give serious thought to what those decisions are meant to make possible. Get that right, and you’ve built something far more durable than a strong return.

I hope you enjoyed these facts as much as I enjoyed putting them together. Thank you for listening, and if you’d like to view any of the research supporting today’s episode, just head over to youstaywealthy.com/291.

Disclaimer

This podcast is for informational and entertainment purposes only, and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.