How To Never Lose Money In The Stock Market, In One Simple Chart

Advertiser Disclosure

Advertiser Disclosure

The Wealth Gang team writes about financial information, passive income ideas, apps, programs, cash management tools and other wealth gadgets that we think you might want to use or learn more about. Sometimes, we write about products, services or items that might be associated with affiliate partnerships. In these instances, we will earn a small percentage of the revenue from sales. There is, of course, no cost to you.

Thank you for all your support! Without you, we could not keep this site running. Gang Gang!

How-to-never-lose-money-in-stock-market

Day to day, the stock market is a crapshoot. If you day trade or swing trade, you probably know how to navigate these natural ebbs and flows. But if you’re investing your money for the long haul, seeing wild dips and swings can be unsettling at times.

In March of 2020 we saw that first hand. If you held just about any stock or ETF, you would have seen it drop like a rock in the span of a few days. Take VTI for example. It fell from a $170 per share to $115 in the matter of weeks. Selling then, out of panic and fear, would have cost you the nearly 100% gain it made over the course of the rest of the year.

Below shows the market’s annualized returns in 1, 5, 10, and 20 year rolling periods.

As you can clearly see, time in the market is better than timing the market. Especially over the long haul.

The range of returns between 1 and 5 years can be extremely volatile and unpredictable. Just like the VTI scenario from 2020 mentioned above.

  • 1-year: From -37% to 53.2%
  • 5-year: From -11.7% to 28.5%
  • 10-year: From -4.1% to 17.6%
  • 20-year: From 0.5% to 13.2%

Now, of course you shouldn’t look at your investment portfolio as set it and forget it. It’s wise to look at your portfolio and rebalance it from time to time. You also shouldn’t take the entire market outcome over 20 years and associate it to single stocks. Businesses fail every day. If you want similar long term returns, you need to be diversified.

[H/T Measure of a Plan]

Author
C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.

Current Top Offers

fundrise logo

Invest in Commercial Real Estate With As Little As $10

m1 finance logo

Get a $50 bonus for creating and funding a new account

Invest spare change easily. Get $5 when you sign up for Acorns.

Earn an unlimited 1.5% back in Bitcoin on every purchase with the BlockFi Rewards Visa® Signature Credit Card.

Put your crypto to work. Get up to a $250 crypto bonus with a transfer of $100 or more in crypto.