Here's your "the market is falling and I'm in a panic" reminder for today:
Even after the bear market of 2000-2002, the stock market has returned, on average, about 12% per year since World War II. That’s for a portfolio that is one-half large company stocks and one-half small company stocks. This assumes all dividends were reinvested and ignores the unfortunate fact that in real life Uncle Sam steps in and confiscates a hefty portion of your gains.
Time is on the side of the long-term investor. The longer you are willing to keep your money in the stock market, the greater your likelihood of success. According to the Ibboston data, if you picked any 12-month period at random since World War II to own stocks, you had a 78% chance of making money. How much money? You would have had about a 39% probability of making 20% or more, a 22% chance of making 10%-20%, and a 17% chance of earning 1%-10%.
If you have a long-term investment horizon (10 years or more), the current happenings in the market shouldn't bother you one bit.
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