Lesson 4.3

Why You Should Keep a Long-Term Perspective

Picture #1:

  • Bottom line of graph is a Savings Account (basically flat)
  • The next line above is 100 % Bonds/Fixed income
  • The next line above  is an allocation of 60% Stocks/Equity and 40% Bonds/Fixed income
  • The top line is 100% Equity/Stocks

Picture #2:

  • •Notice the S&P 500 does not always go up every year.

  • For this data the S&P 500 was positive 36 years and negative for 9 years.

  • Short term perspective/money is not for the stock market as it is too risky, look at years 2001 – 2003. If you needed your money to increase in value to be used in 2004 then you would have actually lost money as the market declined 3 years in a row.

1 | 1.1 | 1.2 | 1.3 | 2 | 2.1 | 2.2 | 2.3 | 2.4 | 3 | 3.1 | 3.2 | 4 | 4.1 | 4.2 | 4.3 | 4.4 | 4.5 | 4.6 | 5 | 5.1 | 5.2


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