No False Steps

What happens to the overall value of your retirement account if you make a mistake or take a false step by getting out after a bad year. For this analysis lets assume that you had invested in the S&P 500 and after a horrendously painful year, with a return worse than -20% for the calendar year, you couldn't take it anymore and decided to get out of the market for one year. How would this impact your overall portfolio value.

There have been three time since 12/31/71 where the return for the calendar year was less than -20%.

In each instance, if you had gotten out of the market for a year after the terrible year, your portfolio would be significantly lower. In fact, if you had gotten out those three instances your portfolio would be worth less than half (45%) as much. This could be the difference between a retirement portfolio that provides for your retirement or one that runs out. It is essential to find an investment strategy that works for you and minimize the false steps.

 

Disclosure:

The information presented here is the opinion of the author and may quickly become outdated and is subject to change without notice. All material presented in this article are compiled from sources believed to be reliable, however accuracy cannot be guaranteed. No person should make an investment decision in reliance on the information presented here.

The information presented here is distributed for education purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or participate in any particular trading strategy.

Performance data showing past performance results is no guarantee of future returns.

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