The stock market didn't show a net gain from the beginning of 2000 to the end of 2009. But for some investors, the last decade was anything but a lost decade: In the same period, their investments gained 150%.

For any investor who simply parked money in the domestic stock market, including many retirees, the '00s offered exactly zero return. But many retirees weren't invested solely in U.S. stocks, which gave them a better chance of gaining ground. And most investors, unlike most retirees, could keep adding money to the market throughout the decade. Those folks tended to fare considerably better than zero.

Our friends at Fidelity Investments recently announced that between 1999 and 2009, employees who regularly contributed to their 401(k) accounts realized a gain of almost 150%, with the average account balance advancing from $66,000 to $164,000. (These folks were socking away about 10.4% of their incomes.) That 150% gain translates to an average annual increase of roughly 9.5%.

Staying on target
During the period, Fidelity found that investors who took on higher-risk investments than those chosen by the target-date fund that matched their age underperformed the target-date funds. These vehicles adjust their asset allocation automatically each year as they approach a given retirement date.

While target-date funds may not be as superior an investment as Fidelity's data suggests, they do offer easy diversification. Here's a quick breakdown of holdings in the Vanguard Target Retirement 2025 (VTTVX) fund:


Percentage of Target-Date Fund Assets in This Fund

10-Year Annualized Return

Holdings Include

Total Stock Market (VTSMX)



Wells Fargo (NYSE: WFC), AT&T (NYSE: T)

Total Bond Market (VTBIX)



Treasury, agency, and corporate bonds

European Stock (VEURX)



HSBC Holdings, GlaxoSmithKline (NYSE: GSK)

Pacific Stock (VPACX)



BHP Billiton (NYSE: BHP), Rio Tinto (NYSE: RTP)

Emerging Markets (VEIEX)



Teva Pharmaceutical (Nasdaq: TEVA), Infosys (Nasdaq: INFY)

Source: Morningstar.
*Return is for similar fund (VBMFX) with longer history.

The path to retirement riches
Why, then, did target-date funds beat more aggressive investors? I suspect the data illustrates that your allocation matters. During the past decade, U.S. stocks underperformed many other sectors of the market. But in the future, they may surge ahead, eclipsing bonds and other vehicles that left them eating dust in the '00s.

Over the long haul, as long as you're not in or too near retirement, you'll likely do better by placing much of your money in stocks. And with foreign economies enjoying greater odds of growing faster than our own, a fatter slice of international exposure in your portfolio might help you earn fantastic returns. Most importantly, Fidelity's data shows that contributing regularly and steadily to your investments over time may be the best way to secure a prosperous and profitable future.

Further unretiring Foolishness:

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. The Fool owns shares of GlaxoSmithKline.  Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools