The Wall Street Journal's Marketwatch website recently reported that in the past three years, from September 9, 2008 to September 9, 2011, the S&P has gone nowhere - 0.00% when dividends are factored in. This fact, along with the negative global news surrounding the investment markets, may make you wonder why you're invested in stocks if over three years you've made nothing on that investment. You may even remember reading an article or hearing your financial adviser tell you that U.S. Treasury bonds or bills have such a low return that they aren't worth a second look. Looking back, even if they averaged a yield of 2%, that's still better than 0.00% on the S&P 500.

If that 0% gain wasn't depressing enough, if you had invested in an index fund either as an exchange traded fund or mutual fund, you would actually be down slightly because you still have to pay the fees that came with those funds. The answer is not in what the statistics are telling you, but what they aren't telling you.

Before you give up entirely on the market, remember that your entire retirement, IRA, or individual investment account hopefully isn't 100% invested in stock-based products. The fact that this one index is flat doesn't speak for your entire portfolio. In fact, many financial advisers recommend only committing 5% to 10% of your portfolio to index funds. (For more check out The Lowdown On Index Funds.)

TUTORIAL: Investing 101

Look at the Details
Normally we are too focused on the details and miss the big picture, but in this case, it is the opposite. The S&P 500 is a weighted average of 500 stocks with some of those having a rough three years while others have done quite well. If you held Apple (Nasdaq:AAPL) for three years you would be quite happy with the 149% gain you've seen. If you aren't skilled at choosing stocks, staying with a broader index fund will return impressive gains over time when the dividend is factored in.

The Dividend
The dividend plays a big part in the gains of any portfolio, and if you're not taking advantage of stocks that pay dividends, you're missing out on virtually free money. Dividends are like interest in your savings account. You don't have to do anything to earn it and although some companies will cut their dividends, it is still a steady, secure source of income. Many higher wealth individuals live on the dividends that come from their stock purchases. (To learn more, read Why Dividends Matter.)

How About 10 Years?
In the past 10 years, the S&P 500 has lost an inflation adjusted 13.54% of its value. Once the inflation adjusted annual dividend is added in, it is up 8.4% in those 10 years. While this isn't an impressive 10 year return, these numbers would be much different just two months ago before the S&P 500 suffered a loss of 14%.

How about some individual names? If you would have seen the potential in Green Mountain Coffee Roasters (Nasdaq:GMCR) 10 years ago you would have a 5,067% gain today. Apple has a 10 year return of 4,320% and Amazon.com (Nasdaq:AMZN) has seen 2,448% added to its stock price.

Of course, the chances that you added these names to your portfolio and then held them through the good and bad times are not very likely, but these figures clearly demonstrate that when a portfolio is supplemented with a few good stocks, the gains can be quite impressive. Even if you held these names for half or a quarter of the time, you would be proof that investing in the stock market isn't a losing venture.

Index Funds Versus Actively Managed Funds
If you're not skilled at choosing stocks and you don't want to take the chance that your financial adviser or the people managing your mutual funds are either, invest in index funds as an exchange traded fund or mutual fund. One study showed that over a 10-year period, out of 262 mutual funds studied, only 46 beat the S&P 500.

The Bottom Line
Sure, there are other investment vehicles that have performed better than the average returns of the S&P 500, but that doesn't mean that your money should steer clear of the stock market. When dividends and good stock picking by a skilled investor supplement other investment products, the stock market remains an impressive source of revenue over time. (To help you find an adviser, check out Find The Right Financial Adviser.)

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