Investing is the opposite of gambling. The more often you invest, the higher your chance of having success.
New investors often get flustered when their portfolios aren’t WAY up right after they begin investing. But that’s how investing works. It’s wildly unpredictable in the short term and becomes more and more predictable with time. Investing only grows your wealth with a great deal of certainty IF you are patient over decades.
What’s not shown in the post is how big your portfolio grows during the different periods of time. For example, the odds of losing money slightly go down when you invest for ten years instead of five, but your average account value goes way up when investing for ten instead of five years.
This is also why if you are planning to use your money in the next few years, you should NOT invest it. If you are saving for a down payment to buy a house in one year, you don’t want to risk investing that money because a quarter of the time you would end up losing money! You should use a cash account, like a High Yield Savings Account, instead.
This is research from Bank of America. They are using S&P 500 returns, including dividends, over last almost 100 years (1929-2023).
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane
