Recently, the market has turned into a yo-yo which is very unsettling to many investors. When the market dropped 800 points last week, one of my clients was tempted to jump out of the market. I asked him “when he would come back in?” and he replied “when it starts to go up”…
Historically, when you jump in and out of the market, you usually miss the day the market goes up. I urged him to stay invested and here’s why:
- 15 of the 20 BEST days occurred within 1 month of the 20 WORST days over the last 10 years.
- If an investor missed the 5 best days over the past 10 years, they may have lost 28% of their total return.
Hypothetical Growth of $10,000 Over the Past 10 Years
| Invested | Not Invested | Not Invested | Not Invested | Not Invested | ||||||||||
| All Days | 5 Best Days | 10 Best Days | 20 Best Days | 30 Best Days | ||||||||||
| Growth of $10,000 | $ 37,143 | $29,636 | $24,923 | $18,654 | $14,670 | |||||||||
| Total Return | 271% | 196% | 149% | 87% | 47% | |||||||||
| Annualized Return | 14% | 11% | 10% | 6% | 4% | |||||||||
| % of Total Return Lost | 0% | -28% | -45% | -68% | -83% | |||||||||
Source: Bloomberg Data as of 7/31/2019. The above data demonstrates hypothetical performance, has the benefit of hindsight and is not the result of actual investing. Actual results may vary.
We use science-driven research and comprehensive analysis tools aiming to minimize risk for our clients. Timing the market like a 50/50 coin toss is risky and a gamble we urge our clients to avoid. We are available any time to answer your questions. Don’t hesitate to let us know if we can help in any way.
Olson Wealth Group is a full service wealth management firm. With wise counsel and clear strategies, our experienced specialists provide tailored approaches that strive to maximize wealth. For more information, please visit OlsonWealthGroup.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Registered states include: AR, AZ, CA, CO, FL,GA, IA, IL, IN, MA, MD, ME, MI, MN, MO, MT, NC, ND, NV, NY, OH, OR, PA, SC, SD, TX, VA, WA, WI, WY. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.