AWARDS
31 years of stock market returns in one Hashtag# chart that offers a different perspective. The past cannot predict the future. However, studying the past can provide a baseline to help set expectations when it comes to risk and a potential range of outcomes. Here’s a different way to look at returns over various time horizons for the S&P 500 starting in 1993, courtesy of awealthofcommonsense.com Here’s how to read this chart: 1) Pick a starting year. 2) Then, you tap in the number of years and the corresponding square will tell you the annualized return from that starting point. For example, the 9-year annualized return starting in 1993 was 14% per year. You can see that there has been more green than red since 1993, but there have been some painful periods for investors. There have been no losses for 11 years or more, but starting in 1999 or 2000 has lost a decade. You also have multiple time frames with losses 2, 3, 4, and 5 years into the future. Five years can seem like an eternity in the stock market. The range of results is also interesting to consider. - 10-year annualized returns ranged from -1% to 17%. Over 15 years, there was a high of 14% and a low of 4%. - Over a 5-year time horizon, the range was -2% to 29% annualized. Bottom line: Your stock market experience can vary dramatically depending on your timing. The good news is that going long-term removes a lot of variation from the equation. Look at the returns on the bottom left: they are all in a fairly narrow range. The 31-year annualized return from 1993 to 2023 was about 10% per year, right around the long-term averages. Source: Ben Carlson @awealthofcs
Thanks to C.H.Monchau
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