I have to tell you a couple of things before you look at the graphic. First, the numbers DO NOT include inflation. Second, the numbers are based on the index and therefore DO NOT have fees and expenses deducted from the results. In other words, actual performance wouldn’t have been as good as the results shown. Third, I assumed $100 per month going into the index at the beginning of each month. Here are the rankings:
I highlighted the latest 30-year period in red to give you an idea of where it stood compared to other periods.
Now, here is the same information displayed in chronological order:
Looking at that graphic, it makes one thing clear: one year can make a huge difference! For instance, check out the 1978-2007 period, which would have grown to $330,842 over the 30 years. But, had your 30-year period started the next year, the account would have only grown to $180,713 due to 2008’s pathetic performance.
I think what we can take from this is that investing is a long-term adventure and the key to a successful investment plan is flexibility. If investment plan goes down right before retirement, you might consider working a couple of more years or cut back on your retirement goals. Don’t lose heart. Retirement can easily last 20 or more years, which will give you plenty of time to rebound as long as you are prudent.