IS NOW A GOOD TIME TO INVEST?
| GLENN WOODY FINANCIAL CONSULTANTS, INC. |
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| Costa Mesa, CA | La Quinta,CA |
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IS NOW A GOOD TIME TO INVEST?
| This is one of the most often asked questions.
You may be surprised to know that it is also one of the easiest to answer.
No one can predict what the financial markets will do from week to week
or month to month or even year to year. Yet, just about any time is a good
time to begin a long-term investment program - particularly if you plan
to invest regularly, and believe, as we do, that over the years the world's
economies will continue to grow and that many good companies will continue
to benefit.
Looking back over the years, the worst thing anyone could have done was to wait for the "perfect" time to invest and wind up with nothing. For most long-term investors, what has ultimately been important is not when they started but that they did start. The following tables show two scenarios. In the first, we assume a person put $5,000 into the stock market (as represented by the Standard & Poor's 500 Composite Index) at the worst possible time every year ... the day the market hit its highest point of the year.
In the second example, we assume a person put $5,000 into the market
at the best time... the day the market hit its lowest
point of the year. As you can see, if you had invested at the worst possible time year after year, you would have put in a total of $120,000 and by December 31, 1995 it would be worth $792,640. That is an average return of 13.6% a year. If you had invested at the best possible time, you would have $1,009,256, an average return of 15.2%. a year. The point is, under either program, you
would have
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| This is what would have happened if you had invested $5,000 a year in the S&P 500 far the past 24 years on the worst possible day each year.... The day the market peaked...... |
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Date of |
Cumulative |
Value on |
|---|---|---|
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11 Dec 72 |
$5,000 |
$4,990 |
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11 Jan 73 |
$10,000 |
$8,447 |
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13 Mar 74 |
$15,000 |
$9,829 |
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15 Jul 75 |
$20,000 |
$18,296 |
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21 Sep 76 |
$25,000 |
$27,136 |
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3 Jan 77 |
$30,000 |
$30,404 |
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8 Sep 78 |
$35,000 |
$37,006 |
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5 Oct 79 |
$40,000 |
$48,750 |
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20 Nov 80 |
$45,000 |
$69,458 |
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27 Apr 81 |
$50,000 |
$70,779 |
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27 Dec 82 |
$55,000 |
$91,005 |
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29 Nov 83 |
$60,000 |
$116,408 |
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6 Jan 84 |
$65,000 |
$128,823 |
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16 Dec 85 |
$70,000 |
$174,617 |
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2 Dec 86 |
$75,000 |
$211,931 |
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25 Aug 87 |
$80,000 |
$226,705 |
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21 Oct 88 |
$85,000 |
$269,043 |
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9 Oct 89 |
$90,000 |
$358,983 |
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16 Jul 90 |
$95,000 |
$352,355 |
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31 Dec 91 |
$100,000 |
$464,243 |
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18 Dec 92 |
$105,00 |
$505,124 |
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28 Dec 93 |
$110,000 |
$560,682 |
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2 Feb 94 |
$115,000 |
$572,901 |
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14 Dec 95 |
$120,000 |
$792,640 |
| .... and this is what would have happened if you had made the same investments on the best possible day each year - the day the market hit bottom. |
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Date of |
Cumulative |
Value on |
|---|---|---|
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26 Jan 72 |
$5,000 |
$5,924 |
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3 Dec 73 |
$10,000 |
$10,30 |
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6 Dec 74 |
$15,000 |
$12,937 |
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2 Jan 75 |
$20,000 |
$24,436 |
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2 Jan 76 |
$25,000 |
$36,396 |
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2 Nov 77 |
$30,000 |
$39,094 |
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28 Feb 78 |
$35,000 |
$47,463 |
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7 Nov 79 |
$40,000 |
$61,698 |
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21 Apr 80 |
$45,000 |
$88,777 |
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25 Sep 81 |
$50,000 |
$90,034 |
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12 Aug 82 |
$55,000 |
$116,443 |
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3 Jan 83 |
$60,000 |
$148,819 |
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24 Jul 84 |
$65,000 |
$163,862 |
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4 Jan 85 |
$70,000 |
$222,438 |
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22 Jan 86 |
$75,000 |
$270,006 |
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19 Oct 87 |
$80,000 |
$289,622 |
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20 Jan 88 |
$85,000 |
$343,332 |
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3 Jan 89 |
$90,000 |
$458,426 |
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11 Oct 90 |
$95,000 |
$449,776 |
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9 Jan 91 |
$100,000 |
$593,127 |
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8 Apr 92 |
$105,000 |
$644,496 |
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8 Jan 93 |
$110,00 |
$714,505 |
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4 Apr 94 |
$115,000 |
$729,097 |
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3 Jan 95 |
$120,000 |
$1,009,256 |
| Glenn D. Woody, CFP President 151 Kalmus Drive, Suite C-150 |
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