On Thursday of last week, the Dow closed above 16,000 for the first time in its history. I will never forget where I was on that day.

It was a very bittersweet day for the Gunderson family. At 9pm in St. George, Utah I was with my mother, Lucille Bracken Gunderson, who passed from this life and into the next at age 87.

Just one hour before my mother was released, my wife and I became grandparents. At 8pm, Melissa Odette Furrows entered this world in Rexburg, Idaho. My wife got there just in the nick of time while I remained behind to be with my mother.

It is funny how things work out some times. One coming and one going.

So Mellisa Odette Furrows was born on November 21, 2013 with the Dow at 16,000. When my mother was born in Tooele, Utah 87 years earlier, the Dow was at 160.

What if sweet Melissa grows to the same ripe old age of 87 that my mom did? Where could the Dow be? Well, that is some pretty simple math.

160 is to 16,000 as 16,000 is to 1,600,000!

That works out to about 5.5% per year. If the Dow were to average 5.5% per year over the next 87 years, the Dow would hit 1,000,000 seventy-nine years from now. I wonder if they would split it along the way?

If I put \$1,000 in an index fund for my new granddaughter this week it would be worth over \$97,000 by the time she is 87. (At 5.5% per year.)

If I put that money in a savings account at the bank that averaged 1% per year it would only grow to \$2,377! What good would that be 87 years from now?

You can see the need for being willing to take a little risk with our capital that is set aside for growth.

Just for fun, what if Grandpa Bill is a superior stock-picker and can avoid some of the big downturns in the market with a little market timing over the years? I am not making any promises here, but just doing an illustration.

At 8% per year, \$1,000 turns into \$808,848 over the next 87 years. It sure beats that CD scenario.

At 10% per year, \$1,000 turns into \$3,991,753. I think I choose door number three!

You can see how just a few percentage points over time can make such a huge difference!

I just don’t think that allocating our assets far and wide is the ticket to superior performance over the years. You would probably be looking at more of that 5% outcome, in my opinion.