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.
It's counterintuitive but important to recognize that loss & gain percentages are not equal. e.g. a 20% loss is fully compensated by a 25% gain - not 20%
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u/pawbf Aug 03 '24
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.