A big reason why so many people don’t invest their money in the markets is because it’s something you can put off and not hate yourself for until way down the road. Many have no qualms with owning real estate because it’s almost a tradition plus you need somewhere to live anyway. Just as many celebrate the idea of marriage even with the significant failure rate. Statistically your odds at winning in marriage are about 10 percentage points higher than a typical casino game. Do you feel lucky chump? Well, do you?
Fortunately, the S&P 500 index does not care if you do not take out the garbage or if you gain 70 pounds. Like marriage, it too has its ups and downs but if you stick it out you will be victorious in the end if the last 90 years has anything to say about it.
2001 and 2008 were rough years but we pulled through baby!
What if I lose all of my money?
The S&P 500 is comprised of 500 of the largest publicly listed companies companies in America. If they fail life is over anyway.
Sure, it’s all been good up until now but how do I know the trend will continue?
The truth is you don’t know for sure but this is almost as close as a guarantee you’re going to get. There are no guarantees in life but you have to side with the most rational decisions.
How much am I going to get back in 30 years?
The answer to this is unknown but you can reasonably expect somewhere in the neighborhood of an average of 5 to 10% annually. Much of this depends on how you invest into it.
The data below shows the annual returns of the index since 1988. As you can see there are many more positive years than negative.
If this hasn’t been compelling enough because I’m just some schmuck blogger then you can put your trust in Warren Buffett. He advises that 99% of people should invest in a low cost S&P 500 index fund such as a Vanguard fund and they’ll do great in the long run. Also, when he dies he has planned for 90% of his money to be put in such a fund for his wife.