Please use the excel function data on stocks, bonds, bills to start discussion on time value.

Part 1:

Using the data and $100 invested in stocks, bonds and bills, confirm the values at 2011.

Terminal value at 2011= $100(1+r1)(1+r2)...(1+r84)

where r1= actual return given for 1928

r2=actual return given for 1929

r84=actual return given for 2011 for stocks, bonds and bills

Part 2:

Investing over 84 years is a little farfetched unless your grandfather was like Donald Trump's G.PA. Now consider dividing 1928-2011 to three sub-period of 1928-56 (28 years), 1956-1984 28 yr.) and 1984-2011 (27 yr.). Let's see how investment of $100 in stocks, bonds, bills using again the actual returns provided in each asset class (stocks, bonds, bills) perform? Compare, the future value of each investment as if in the second 28 years, and last 27 years you start with $100 investment in stocks, bonds, bills. What are the lessons we learn in this exercise as far as your future contribution to your own 401K is concerned?

43.81% 0.3458 7.2317E-08 8.30%1-0.1753-9.421E-09 -25. 12901-0.3435-7.088E-08 -43.84%| -0.5307-2.614E-07 8.64901-0.1787-9.98E-09 49.98% 0.4075 1.1834E-07 1.19001-0.1042-1.979E-09 46.74% 0.3751 9.2301E-08 31.94% 0.2271 2.0484E-08 -35.34% -0.4457-1.548E-07 29.28% 0.2005 1.4096E-08 -1.10901-0.1033-1.928E-09 10.67901-0.199-1.378E-08 12.77001-022-1.862E-08 19.1790| 0.0994 1.7176E-09 25.06%0.1583 6.9376E-09 0.098 1.6461E-09 35.82% 0.2659 3.2879E-08 8.43901-0.1766-9.632E-09 1929-69 1970-1999 2000-2010 0.08616 0.0648 0.13066 0.01296 0.108829 0.088824 0.130525 0.051279 -0.03437 0.080762 0.087695 0.170769 0.184469 0.163718 0.080787 0.01121 0.10941 -0.00899 0.0606 0.043716 0.057865 0.0642 0.065179 0.025273 0.048411 0.031066 0.001902 0.033565 0.053135 0.057927 -0.00552 0.00211 0.053637 0.045981 0.055778 0.031254 0.010797 0.018135 0.025409 0.034681 0.03071 0.026578 0.01913 0.00337 0.03069 0.023915 0.018074 0.08616 0.033565 0.010797 -0.0648 0.053135 0.018135 0.13066 0.057927 0.025409 4 0.01296 -0.00552 0.034681 0.108829-0.00211 0.03071 0.088824 0.053637 0.026578 0.130525 0.045981 0.01913 0.051279 0.055778 -0.00337 9 0.03437 0.031254 -0.03069 0.080762 -0.00275 0.023915 0.087695 0.025386 0.018074 0.170769-0.01942 0.173364 0.01576 0.184469 0.045176 0.163718 0.071865 0.080787 0.041376 0.01121 0.034647 0.10941 0.031989 0.00899 0.041111 10 12 13 14 15 16 17 18 0.173364 0.01576 19.03% 43.81% 0.3458 7.2317E-08 8.30%1-0.1753-9.421E-09 -25. 12901-0.3435-7.088E-08 -43.84%| -0.5307-2.614E-07 8.64901-0.1787-9.98E-09 49.98% 0.4075 1.1834E-07 1.19001-0.1042-1.979E-09 46.74% 0.3751 9.2301E-08 31.94% 0.2271 2.0484E-08 -35.34% -0.4457-1.548E-07 29.28% 0.2005 1.4096E-08 -1.10901-0.1033-1.928E-09 10.67901-0.199-1.378E-08 12.77001-022-1.862E-08 19.1790| 0.0994 1.7176E-09 25.06%0.1583 6.9376E-09 0.098 1.6461E-09 35.82% 0.2659 3.2879E-08 8.43901-0.1766-9.632E-09 1929-69 1970-1999 2000-2010 0.08616 0.0648 0.13066 0.01296 0.108829 0.088824 0.130525 0.051279 -0.03437 0.080762 0.087695 0.170769 0.184469 0.163718 0.080787 0.01121 0.10941 -0.00899 0.0606 0.043716 0.057865 0.0642 0.065179 0.025273 0.048411 0.031066 0.001902 0.033565 0.053135 0.057927 -0.00552 0.00211 0.053637 0.045981 0.055778 0.031254 0.010797 0.018135 0.025409 0.034681 0.03071 0.026578 0.01913 0.00337 0.03069 0.023915 0.018074 0.08616 0.033565 0.010797 -0.0648 0.053135 0.018135 0.13066 0.057927 0.025409 4 0.01296 -0.00552 0.034681 0.108829-0.00211 0.03071 0.088824 0.053637 0.026578 0.130525 0.045981 0.01913 0.051279 0.055778 -0.00337 9 0.03437 0.031254 -0.03069 0.080762 -0.00275 0.023915 0.087695 0.025386 0.018074 0.170769-0.01942 0.173364 0.01576 0.184469 0.045176 0.163718 0.071865 0.080787 0.041376 0.01121 0.034647 0.10941 0.031989 0.00899 0.041111 10 12 13 14 15 16 17 18 0.173364 0.01576 19.03%