Not only is it impossible for even the most seasoned market professionals to accurately time the market, but not being invested during only a few of the markets’ highest performing days of the year can greatly decrease your portfolio’s return.

To understand the real risk of the stock market, it’s important to understand the risk of not being invested in the stock market. Historically, the safest long-term investment for the preservation of purchasing power has been stocks. In fact, with dividends reinvested, large company stocks have produced positive returns in over 93% of all the rolling 5-year periods (a new one starts every month) since 1926. 1

Consider the following examples that illustrate the risk of not being invested over just a few of the best days or months of the year.

• A $1,000 investment in the S&P 500 at the end of 1981 would have grown to $25,584 (including reinvested dividends) by the end of 1998. However, if you missed the 30 days with the highest percentage gain of those 4,400 trading days, your investment would have grown to only $4,549. The difference is 82%. 1

• A $1000 investment in 1978 would have grown to $21,750 in 20 years. However if you missed the highest performing 15 months during this time period, then your investment would have grown to only $6,010, a difference of 72%. 1

Staying invested is one of the most effective investment strategies you can implement.

At {$firm_short}, we’d like to help you build a long-term investment strategy to meet your financial objectives. Let us help you reduce risk with a plan tailored to your needs.

Posted by Glenn Hefley in Example -- Finance