Let’s start with two figures (JPMorgan Asset Management, S&P 500, 2005-01-03 to 2024-12-31):
If you stayed invested with $10,000, it would have grown to about $71,750 by the end, an annualized return of about 10.4%.
Miss the 10 best trading days, and you’d have just $32,871, an annualized return of about 6.1%.
Miss 60 more days, and you’d have $4,712, an annualized return of -3.7%—you wouldn’t even preserve your principal.
Many people think they can avoid the pitfalls by getting out during sharp drops and resuming dollar-cost averaging once things settle down.
The same study also found that 7 of the 10 best days in the past 20 years fell within two weeks of the 10 worst days. March 12, 2020 was the second-worst day of that year; the very next day was the second-best.
You exit to avoid the big down days, but the timing window catches the big up days too. Dollar-cost averaging keeps you invested through that window—your contribution goes out on payday, and even on the night of a crash. You’re naturally there for the rebound rallies that often cluster together. Averaging out your cost is just a byproduct.
Would you keep contributing, or get out first?
#定投 #美股 #S&P
If you stayed invested with $10,000, it would have grown to about $71,750 by the end, an annualized return of about 10.4%.
Miss the 10 best trading days, and you’d have just $32,871, an annualized return of about 6.1%.
Miss 60 more days, and you’d have $4,712, an annualized return of -3.7%—you wouldn’t even preserve your principal.
Many people think they can avoid the pitfalls by getting out during sharp drops and resuming dollar-cost averaging once things settle down.
The same study also found that 7 of the 10 best days in the past 20 years fell within two weeks of the 10 worst days. March 12, 2020 was the second-worst day of that year; the very next day was the second-best.
You exit to avoid the big down days, but the timing window catches the big up days too. Dollar-cost averaging keeps you invested through that window—your contribution goes out on payday, and even on the night of a crash. You’re naturally there for the rebound rallies that often cluster together. Averaging out your cost is just a byproduct.
Would you keep contributing, or get out first?
#定投 #美股 #S&P