Over the past several years, market movement has been fairly extreme, beginning with the recession in 2008-2009. Since then, we’ve seen several days that have seen triple-digit moves in either direction within the market.
Regardless of its volatility, the stock market, as reflected in the S&P 500, has outperformed other investment tools over the past 85 years.[1] This means that most individuals can benefit from the market’s movement to both accumulate wealth and hedge against things like inflation.
Spending time in the market can help you continue to save money to reach your goals, like sending your children to college or retiring at age 60. If you invested $1,000 in the S&P 500 in 1970, by 2012, it would be worth just under $59,000. That’s growth of almost $58,000 over the course of about 11,000 days. If you would have missed the market’s best-performing 15 days within that 11,000 day period, your portfolio would only be worth about $22,000. That’s over a $36,000 different for just missing a few days.[2]
Some of the keys to capitalizing on the potential positive returns you can see through spending time in the market is managing your risk through diversification and rebalancing, and remaining focused on your goals. Through our financial planning process, McCabe & Associates begins with your goals and creates an investment strategy centered on them, and we regularly revisit your portfolio to ensure your investments remain aligned with them. To learn more about our financial planning process, we urge you to contact us, and one of our advisors will be in touch with you.
[1] As reflected using the S&P 500 index. The S&P Index is a market-capitalization-weighted index of 500 widely held stocks that is often used as a proxy for the U.S. stock market. Standard and Poor’s chooses the member companies for the 500 based on market size, liquidity and industry group representation. Investors cannot invest directly in an index. Index performance does not reflect the expenses associated with management of an actual portfolio. Past performance is no guarantee of future results. S&P data is provided by Standard & Poor’s Index Services Group.
[2] Hypothetical growth of $1000 from 1970 to December 2012. The S&P Index is a market-capitalization-weighted index of 500 widely held stocks that is often used as a proxy for the U.S. stock market. Standard and Poor’s chooses the member companies for the 500 based on market size, liquidity and industry group representation. Investors cannot invest directly in an index. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. S&P data is provided by Standard & Poor’s Index Services Group.
Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. S&P data is provided by Standard & Poor’s Index Services Group.