We are in the midst of that fifth nerve-racking era and this spreadsheet doesn't even include the Great Recession years due to the inflation-adjustment factor.
So, here's the deal: If you took a hit in the market this past month, history and the law of averages suggests
it could be 2044 until you recoup your losses.
How many years before you retire?
What's your life expectancy?
Market Percentages Are Not Created Equal
One other quick reminder about percentages, appreciation, and loss.
A market loss of 20% requires a gain of 25%;
A market loss of 30% requires a gain of 43%; and,
A market loss of 40% requires a gain of 67% . . .
. . . just to break even!
Ever climb up a long set of stairs? Then you know it takes significantly more time and effort walking to the top than it does on the return trip.
The stock market is that set of stairs.
So, I'm Doomed You're Telling Me?
Not necessarily. But for your own peace of mind, use this pandemic down time to reevaluate your risk tolerance and think about your own time horizon.
If you are within a few years of or are already in retirement, there are safer ways to secure your future than gambling on the stock market.
For instance, a 60-year-old male seeking to roll his retirement funds into an annuity last week was provided a quote that . . .
a) Gives him an immediate 7.50% credit to his account which
b) Then grows at a guaranteed 7.50% per year for seven years until
c) He begins his lifetime withdrawal of 5.20% of his accumulated balance which
d)
He can never outlive!
This particular option, like many we offer, can increase in value if the market increases (up to a cap) but will never decrease when the market drops. But there are guaranteed minimums to prevent catastrophic loss.
These options are available for structured settlements as well retirement funds and savings by the way.
It never ceases to amaze me that people still take such unnecessary risk with the market when there are options like these available.
