Does this stat ever come up, and does it help with the constant fear and uncertainty that keeps people afraid of just putting money in and not worry about it?
I may be oversimplifying, but this stat alone is quite reassuring for me.
Let me know if im being naive.
There is no point in time where the US market wasnt higher 20 years later.
byu/readytojumpstart ininvesting
Posted by readytojumpstart
8 Comments
Yup, so if you start at 25 you’ll be rich by 45. Happy midlife!
This sounds pretty naive because it’s not really accounting for inflation… According to a recent Bank of America report, the average 10-year return when you include inflation is actually 0%. Fine, that is not as long as 20 years, so you are probably right, but 20 years is a long time to wait for what is most likely not even a 50% average return. Imagine debating if you should liquidate all your possessions for 100k, be homeless, and put everything in the stock market for 20 years only to find out that after 20 years of delayed gratification, your 100k is now worth only 150k…
Generally common knowledge to the “when in doubt, zoom out” crew. But yeah maybe hearing a number is good for some people.
I have it on good measure that some people might need access to their money sometime in a 20 year period.
This time seems different. We lost a lot and we no longer seem invincible. The petrodollar is also on its way out, the US simply has no response to any of what is going on that advances our global power position.
The 20 year number is picked to exclude the Great Depression. Although from 1929 to post war it didn’t really recover so even the 20 year figure might be wrong.
Plus other countries like Japan have had long periods of depression like Japan still hasn’t recover to 90s highs.
Yeah, but I bet if you pulled out the great depression, and there are some valid arguments for doing so such as regulations and legislation that did not exist at that time, I bet it’s a much shorter time period interval for your break even figure.
What I mean to say is that I bet the great depression is pulling that average way up
It’s called rolling returns. It really only ever gets close around the big crashes like the Great Depression, dot com, and 08