April is National Financial Literacy Month, which was created to to highlight the importance of financial literacy and teach everyone how to establish and maintain healthy financial habits.
Consider the wealth-building potential of the stock market.
How do you feel about the stock market? Some young investors are wary of equities. They remember how the 2007-09 bear market hurt their parents' retirement accounts. But it's important to recognize that Wall Street downturn for what it was: a regular part of the economic cycle.
Back in 2008, the S&P 500 Index, the broad benchmark of the stock market, fell 37%. Those who sold their investments experienced immediate losses that year, but those who hung on saw the index gain 26.5% in 2009, 15.1% in 2010, 2.1% in 2011, and 16.0% in 2012. (These are total returns with dividends reinvested.) From 1986-2016, the S&P's average annual return was 9.99%—and those years included three recessions, three wars, 9/11, the dot-com bust, and the Black Monday crash.1,2
Equity investing has the potential to achieve double-digit returns in a good year. Because interest rates are so low, some fixed income investments are yielding very little. If you're seeking the potential for your money to grow faster than inflation, consider equity investing as an option. Otherwise, you may risk falling behind and coming up short of retirement money, unless you accumulate that money in other ways. Keep in mind, investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal, and potential liquidity of the investment in a falling market.
What is your preferred investing style? Will it offer you the chance to accumulate enough retirement savings by the time you reach your sixties? Call or email our office, we should take a look at your progress.
1. The Standard & Poor's 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
2. The S&P 500 is an unmanaged index which cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.
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