MJ DeMarco
I followed the science; all I found was money.
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"Buy and Hold" is a doctrine of the Slowlane ... invest in mutual funds ... ride out the storm!
Here are some figures.
If you diligently saved 10% of your paycheck for the last 15 years and amassed a nest egg of $100,000, bought into the "buy and hold" strategy by investing in "safe secure" mutual funds, your nest egg would now be worth $40,000. 15 years of savings gone in 18 months.
So now you say "Screw it, it's too late" and you let the investment ride.
To get back to break even ($100,000) neglecting inflation you need a rate of return of 8% each and every year for the next 14 years. At 5%? You need more than 22 years.
So under the Slowlane, we have 29-37 YEARS GONE and you're left with $100K that will be worth $50K in today's dollars.
Here is a great calculator if you like messing around with figures, and it includes inflation figures as well.
http://www.mortgageloan.com/calculator/investment-returns-calculator
Here are some figures.
If you diligently saved 10% of your paycheck for the last 15 years and amassed a nest egg of $100,000, bought into the "buy and hold" strategy by investing in "safe secure" mutual funds, your nest egg would now be worth $40,000. 15 years of savings gone in 18 months.
So now you say "Screw it, it's too late" and you let the investment ride.
To get back to break even ($100,000) neglecting inflation you need a rate of return of 8% each and every year for the next 14 years. At 5%? You need more than 22 years.
So under the Slowlane, we have 29-37 YEARS GONE and you're left with $100K that will be worth $50K in today's dollars.
Here is a great calculator if you like messing around with figures, and it includes inflation figures as well.
http://www.mortgageloan.com/calculator/investment-returns-calculator
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