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The Importance of the Long-Run

It's football season, and I have been a lifelong Minnesota Vikings fan. Depending on the day, that either makes me very happy or very sad. So, I prepare for the long haul (the very long haul after four lost Super Bowls, the most recent of which was 1977). A long-term focus is also key to successful investing because short-term losses are common.

The following table from the American Association of Individual Investors illustrates just how important long-term investing is. As you can see, the longer your time horizon, the less likely you are to lose money in your portfolio.

Odds of Losing Money
Years
Invested
S&P 500 Corporate Bonds Treasury
Bills
1 26% 21% 1%
3 17% 9% 1%
5 14% 3% 0%
10 5% 0% 0%
20 0% 0% 0%
Source: 2018 Ibbotson SBBI Annual Yearbook; data for the period of 1926-2017.

Warren Buffett once said, "The stock market is a device for transferring money from the impatient to the patient." Impatient short-term investors lose out on the long-term gains that enable their portfolios to grow throughout their lifetimes, helping them to achieve their financial goals.

Yes, there is volatility in the stock market (far more than any of us would like recently), but it is important to remember that the volatility is short-term and successful investing requires a long-term perspective. Being patient and betting on the long-run is the only way to go. Good advice coming from a Vikings fan.

If you would like to discuss market volatility or have any questions about investing in general, I would be happy to meet with you for a no-cost consultation. You can e-mail me at mhaertzen@wtwealthmanagement.com
or call (520) 204-1058.

Sincerely,

Matt Haertzen

Matt Haertzen


References:
"How We Define Risk" by American Association of Individual Investors, November 1, 2018


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