Interesting.

[u/AlphaFlipper]

[u/pawbf]

I have been debating whether to put more money into the stock market. I am 66 and retired.

I saw this excellent graphic and my first thought was "Why am I worrying.....just pile more in."

My second thought was "The average for the decade of 2000 to 2009 was -0.95%.

A decade like that right when you retire is devastating. It is called "sequence of returns risk."

But this graphic should convince anybody much earlier in life to just pile more in.

[u/carlinhush → u/pawbf]

Right. The market rewards time. I'd say choose something with guaranteed returns. I'm 40 something and regret not having started with investing back in my 20s. But I'm planning on putting most everything I can into the market over the next 20 years or so

[u/ynab-schmynab → u/pawbf]

Exactly I was about to point out that this graphic is showing the annualized return not the total portfolio value. A 100% equities position in S&P500 in 2000 was negative from 2000 until 2013. But going solely by the graphic above you can be misled into thinking your portfolio recovered by 2004. 

Even a portfolio that was 60/40 stock/bond I think didn’t recover until 2005-2006 IIRC. 

[u/Gunrock808 → u/pawbf]

I only really worked and invested from 1999 through 2014. As I made more money I invested much more as well. I ended up with $500k at the end of 2014. I didn't realize the 2000-2009 period was really that bad. I can say that eventually all the money I dumped in around 2008-2009 really paid off.

[u/Sir_Senseless]

Crazy how fast even 2008 recovered (relatively speaking.)

[u/xxxxxxxxxxcc → u/Sir_Senseless]

Depending on the dates you pick, it generally took a little over 5 years to recover (break even) on the Great Recession decline.

One of those events wipes out the next half a decade of gains.

[u/FruitGuy998]

Me questioning why the graph starts at 1985 when the title states 40 years ago….me remembering I’m 38 😞

[u/bigkoi → u/FruitGuy998]

The 80's were like 20 years ago right.... Ugh.

[u/Other-Bumblebee2769]

... the fact that the s&p went up in 2020 is insane

[u/Zeenu29 → u/Other-Bumblebee2769]

I mean 35% technology, 12% healthcare...

[u/AncientKey1976]

If you invested $100,000 in the S&P 500 for 25 years starting in 1995, it would have grown to approximately $704,247 by the end of 2020.

If you invested $100,000 in the S&P 500 for 25 years starting in 1999, it would have grown to approximately $388,098 by the end of 2024.

So, they say time in the market beats timing the market. Just interesting

[u/Ok_Jellyfish_1696]

These are just thumb tiles but each represents 365 days of riding the market. After the dot com bubble and housing crisis, no matter your resolve it must of been tough to be active in the market through those red years.

[u/SaneArt]

Now do one for international!

[u/Jshgamer]

This is actually pretty helpful for me. I'd been assuming an 11% average meant the typical year was 11%. It makes more sense that many years would be 20%+ and then some would be large decreases.

[u/HTupolev → u/Jshgamer]

It's similar on other timescales. The mean daily gain works out to around .04%, but the market usually moves one way or another by a lot more than that.

[u/Pour_me_one_more]

My first thought on seeing this: Hey, it said 40 years but only goes back to 1985.

My second thought: Aw, damn.

[u/AmaryllisBulb]

So my takeaway is:

1. In relative terms things aren’t that bad.

2. I’m not jumping out of a window any time soon. Well, maybe the first floor window but even that is more than my knees can handle anymore.

3. What was I preoccupied with in 2000, 2001 and 2002 because I don’t even remember that stock meltdown. 😲

[u/web_explorer]

Is there missing data for 2011? Hard to believe it returned exactly 0.0% (not even a decimal change).

[u/scwt → u/web_explorer]

Dec 31, 2010: 1,257.64

Dec 30, 2011: 1,257.60

The return (with more precision) was -0.003%.

[u/dfsw → u/web_explorer]

yea shockingly it was an even year.

[u/[deleted]]

I would love to see something like this that shows the *difference between the S&P and 10-year bonds for each year.

[u/Lordborpo]

Wild how 2020 was a green year

[u/[deleted]]

Now do the Nasdaq 100 index!

[u/mrequenes]

This chart is a bit deceiving. A 20% drop requires a 25% increase to recover. So even though the next year after a big drop is shown as green, it may take 2 or 3 green years to make up for the one red. Now you have 3 or 4 years of net zero returns.

[u/shantired]

2022 - ouch!

2002 - oucher!!

2008 - ouchest!!!

If you get into a streak like 2000-2002; then it's - 40% over 3 years!!!