“Virtually all investing mistakes are rooted in people looking at long-term market returns and saying, ‘That’s nice, but can I have it all faster?’”
– Morgan Housel
One of the most important aspects to investing is time. If you are investing with a short time horizon, the odds of having a positive return decrease. Below is one of my favorite charts demonstrating that point:
On any given day in the stock market your odds of a positive return are 53%, little better than a coin flip. If you increase that holding period to a year your odds increase to 75%. With a 5-year holding period you have an 88% chance of a positive return, and with a 20-year holding period there has been a negative return for U.S. stocks.
If you’re investing in the stock market, the longer your time horizon the better.
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