I usually avoid recommending any specific investments and do not write financial blogs. I felt compelled to write this as I see many people around me jumping into stocks with all their savings just because 2013 and 2014 were good in the US stock market.
Also, be aware that gambling in stock market can be worse than gambling in Las Vegas. No limits at all. You can have a high flyer and a dud to more than wipe it out.
Here is the summary of how S & P 500 Index did since 1957. I picked 1957 because that was when I found the oldest data on S & P 500 index. 58 years is long enough for this blog.
See the spreadsheet and feel free to download but for those who are not so much into analyzing spreadsheets, here are my thoughts:
S & P 500 Index 1/1/1958 to 1/1/2015
1. Historical average was 7.66%
2. Down 15 years which is 25% of the time.
3. When the market fell it took 13 years to regain (see 1999-01-01 vs 2012-01-01)
4. Max down side was 23% in 1974 but most recently 22.3% in 2008 as seen on 2009-01-01
5. Max upside was 34% in 1983 but most recently 24.9% in 2013 as seen on 2014-01-01 but 11.9% in 2014.
6. Long term investors who can wait for 10 to 13 years were rewarded.
Caution:
In the short term market may swing up or down double digits.
Those close to retirement needing the money should be aware that it took as much as 13yrs to recover assuming someone invested in 1999.
If it went down 22.3% in 2009 it may happen again in the next 5 yrs.
Major run up of 24.9% in 2013, 11.9% in 2014 could mean below 7.66% average in 2015
Stock market investment is for long haul. Do not expect double digits every year!
Also, be aware that gambling in stock market can be worse than gambling in Las Vegas. No limits at all. You can have a high flyer and a dud to more than wipe it out.
Here is the summary of how S & P 500 Index did since 1957. I picked 1957 because that was when I found the oldest data on S & P 500 index. 58 years is long enough for this blog.
See the spreadsheet and feel free to download but for those who are not so much into analyzing spreadsheets, here are my thoughts:
S & P 500 Index 1/1/1958 to 1/1/2015
1. Historical average was 7.66%
2. Down 15 years which is 25% of the time.
3. When the market fell it took 13 years to regain (see 1999-01-01 vs 2012-01-01)
4. Max down side was 23% in 1974 but most recently 22.3% in 2008 as seen on 2009-01-01
5. Max upside was 34% in 1983 but most recently 24.9% in 2013 as seen on 2014-01-01 but 11.9% in 2014.
6. Long term investors who can wait for 10 to 13 years were rewarded.
Caution:
In the short term market may swing up or down double digits.
Those close to retirement needing the money should be aware that it took as much as 13yrs to recover assuming someone invested in 1999.
If it went down 22.3% in 2009 it may happen again in the next 5 yrs.
Major run up of 24.9% in 2013, 11.9% in 2014 could mean below 7.66% average in 2015
Stock market investment is for long haul. Do not expect double digits every year!
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