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January 12, 2022

Will history repeat itself?

By Gordon Powers, Sympatico / MSN Finance

After shredding their yearend statements, it’s easy to see why so many investors are quick to challenge the boring advice of staying the course and continuing to invest regularly. Why bother throwing good money after bad, they ask?

Of course, if they don’t believe that stock markets are ever going to recover, then they’re probably right. But if you feel, as I do, that it’s still possible for market results to again reflect their historical average then you have to keep going.

How long is it going to take? Well, that obviously depends on how much you’ve lost and what you’ve got to work with. Still, it’s nice to have an idea of what it’s going to take to at least get back to where you were before all this started.

For instance, say your $80,000 stock portfolio has shrunk to $59,000 over the past year. If you make no new contributions, it will take roughly six years to recover, assuming an 8% return (the average for stocks going back to 1950) and modest inflation of 2%.

Throw in $5,000 a year and you could get there in less than three years. Make it $8,000 and you could catch up in roughly two years. You get the idea.

Will the market deliver an 8% return over your lifetime? I really don’t know. But I think it’s a reasonable bet – at least for some of your money.

Use this tool to create your own view of the future and calculate how long it might take for your own portfolio to return to its peak levels.

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo), canoe.ca, AOL.ca, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...