šŸ“¢ Investors šŸ“¢

Don't try to time the market!

This hypothetical shows why timing the market doesn't work šŸ‘‡

John, Tom, and Steve invest $200 each month starting in 1979.

Over the course of 40 years, they all invested $96,000 in the S&P 500.

Here's how their timing strategies panned out:

āŒ John: Terrible Timing

John put his money into a savings account (3% return) every month until he
bought and held the S&P 500 at the 3 highest peaks (1987, 2001, and 2008).

John's portfolio value in 2019: $663,594

āŒ Tom: Perfect Timing

Tom also put all of his money into savings, but he bought at the 3 lows and held
his investments. He made 3 perfectly timed investments.

Tom's 2019 value: $956,838

āœ… Steve: No Timing Strategy

Steve put his $200 directly into the S&P every month regardless of the price and
held it.

Steve's 2019 value: $1,386,429

Steve's consistent strategy beat the others by 30% and 52% respectively.

A savings account can't compare to the S&P 500 90-year annualized average
returns are 10%.

Compounding returns are key to building wealth... Not timing the market.

Need some more clarity?

Reach out in the comments for a detailed breakdown of this example with graphs

#WealthManagement #Investment #FinancialAdvisor

Posted by Gordon Bernhardt on LinkedIn
link: linkedin.com/in/gordonbernhardt