The S&P 500 has a long history of going up 10% a year on average. But it’s a big mistake to think you will get a 10% return every year when you invest. It’s actually the exact opposite. The stock market very rarely goes up by 10%! Out of almost 100 years, the S&P 500 has only gone up between 8%-12% SIX times.

This visual also highlights how insurance products that give you a floor of 0% and a ceiling of something like 7% are so bad. Look at the number of years the stock market is up over 20%. Insurance companies have teams of researchers analyzing this data. They know exactly how to design a policy to stack the odds in their favor. Limiting your downside to 0% can make for a good sales narrative, but you will dramatically underperform by capping your upside returns.

What’s the main takeaway for you? Keep investing early and often in low cost index funds. There will be great years. There will be terrible years. That’s all part of investing. Buy more shares at a discount when the stock market is down and reap the rewards when it bounces back. And it will eventually bounce back. It has a 100% track record of doing that!

This visual is from research done by BlackRock, using S&P 500 returns from 1926 through the end of 2023.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Vivi & Shane