š¢ Investors š¢
Don't try to time the market!
This hypothetical shows why timing the market doesn't work š
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 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 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
ā 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
šš¬
#WealthManagement #Investment #FinancialAdvisor
Posted by Gordon Bernhardt on LinkedIn
link: linkedin.com/in/gordonbernhardt
Don't try to time the market!
This hypothetical shows why timing the market doesn't work š
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 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 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
ā 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
šš¬
#WealthManagement #Investment #FinancialAdvisor
Posted by Gordon Bernhardt on LinkedIn
link: linkedin.com/in/gordonbernhardt
