All of the above was excellent, sound financial advice. Another financial adage is time in the market generally outperforms "timing the market"! I would add another handy financial tool to use when figuring the power of compounding. It is called the Rule of 72. All you have to do is divide the rate of return into the number 72 to calculate the number of years that it will take to double your investment. For example: a 9% yearly average rate of return will double your money in 8 years. Not always the easiest to do because some years the market loses money, no matter what you do. A goal would be to double your money every 7 years. Using the Rule of 72 once again, it would take a roughly 10% average rate of return to double your investment in seven years. It has been said that compounding is one of the most powerful forces on earth.nycWATCHnerd wrote: ↑Tue Nov 12, 2024 4:45 pmDon't get confused by returns (good or bad) of the past few years because they are not realistic.15peter20 wrote: ↑Tue Nov 12, 2024 11:31 amI would tend to agree. I got into investing during the pandemic. I made some decent money on some stocks and lost on some others but I was down overall. I've just been filling my ISA every new tax year and just buy Vanguard's S&P 500 fund and I'm up nearly 70% and £41k in profit. Not bad for clicking a few buttons once a year and reinvesting the dividends when I get them. The S&P 500 is by far the safest way to grown your money but it's no get rich quick scheme but your money will definitely start to snowball over the years.nycWATCHnerd wrote: ↑Mon Nov 11, 2024 2:28 pm Investing in low cost mutual funds for more than 30 years (and never selling through any downturn) allowed me and my wife to retire very early.
The best way is to dollar cost average by investing regularly, do not sell in a downturn but rather ride it out by doing nothing, and time (aka compounding) is your friend. Think about the next 5, 10, 15, 20, 25, and 30 year returns and do not focus on the next quarter or even the next year. Do not time the market. Ignore the so-called experts in the financial media (because a monkey could give better advice than all of them).
My wife and I have been dealing with historical events since the early 1990s: coming out of the savings and loan crisis of the 80s, 1987 stock market crash, bad job market in the early 90s (which we entered after college/university), dot com blow up in the early 2000s, financial/housing crisis and the great recession of 2006-2009 (really until 2013), and the pandemic market meltdown of 2020.
We stopped buying individual stocks in the late 90s. We only purchase low cost mutual funds. During the 7 years of the recession (2006-2013) we curtailed our spending so we could max out all retirement accounts and put extra money into taxable investment accounts. People thought we were crazy because we kept buying all those years as the market kept going down and it finally started paying off in 2013 with amazing returns on all those shares we bought at really cheap prices. Similarly, we saw March 2020 as a buying opportunity because everything was down 30-40% so in our minds the stock market was on sale. We have literally never sold a share.
We have been able to do what 95% people cannot do: ignore the bad news, do nothing, and keep investing for the long term.
Delmar
