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.
Posted by: onemoretime | Jan 14, 2022 9:05:28 AM
I was one who believed that the 8% was possible and was satisfied with that return . It never happened and I do not expect that that will be the case in the future . I have what I had in 1989 and consider myself to be lucky.The people who made money were the ones who worked with my money and I don't intend to support them any longer.