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Returns Over Time (aka - 'stonks' go up)

This chart had a profound impact on me when I was first starting out as a young loan officer -as I began calling on financial advisors. Many of them had this chart in their office as a giant poster. What's the punchline?


You will never lose money in the stock market, ever, if you follow one rule!

What's the rule? Investing is about starting early and investing for the long term. If you start later, the odds of making money go down, but they still have a 100% expectation of gain at a certain point.



Let's deconstruct this chart and the message above.


If you are investing, and you plan to hold for 1 day, you have a 52% (coin flip) of making money on your investment. You are truly gambling.


If you have a 2-12 month horizon for your investment, your odds of making money increase to 60-68%. That is a lot better than the odds you get in Las Vegas, so things are tilting in your favor.


If you nave a 2-5 year time horizon for your investment, your odds of making money increase to 74-80%. That is pretty solid chance of making money.


If you have a 10-15 year time horizon for your investment, your odds of making money increase to 88-95%.


This is the key - over a 20 year time horizon, no one that invested and held onto their investments lost money. You have a 100% expectation (not guarantee) that you will make money from your investments.

TIP: The market will go up, and the market will go down. If you start at age 21, investing even a little bit each year, wouldn't it be exciting to know that by age 41 you have a 100% expectations of having made money on your investing dollars. That doesn't mean the market won't down next year, but if you invested say $100,000 over that 20 years you have 100% likelihood that your investment will be worth more than $100,000 and probably a lot more depending on when you started making your investments.


If you read this and understand this, and you pair it with our Start Early calculator and conversation, you have all you need to create wealth over time. It really is that simple.


PS - Real Estate is much the same, and I'll post it that as well.




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