Happy New Year everyone! I thought this article from the NY Times was well worth sharing: For Savers, It Was Hardly a Lost Decade. As everyone looks back at the ’00s, there will be lots of talk about how the stock market came full circle and at least in terms of overall averages, isn’t worth any more than it was 10 years ago– but as Ron Lieber points out, that doesn’t have to mean that investing is a lost cause.
If you invested $100,000 on Jan. 1, 2000, in the Vanguard index fund that tracks the Standard & Poor’s 500, you would have ended up with $89,072 by mid-December of 2009. Adjust that for inflation by putting it in January 2000 dollars and you’re left with $69,114.
But that is not how most real people invest. They don’t pour everything they have into just one type of asset and then add nothing to it for 10 years. Instead, they buy stocks of all sorts, and bonds and perhaps other things, too. And many millions of them dutifully add more money regularly, usually into a retirement account that they won’t touch for longer than a decade.
For those people, it was not a lost decade at all. Even those who started with a low six-figure balance could have doubled their money in the last 10 years.
I don’t have accurate data going back 10 years, but I’m sure my net worth was less than $50,000 at the beginning of the 2000s. Today, it’s somewhere around $400,000. It’s certainly not because I’m an investing genius, and it’s not because I saved $350,000 in cash. It’s because I spread my investments among different kinds of assets, and made sure to save at least some percentage of my income every month with automatic deductions. If you keep your portfolio balanced and regularly add to it with monthly savings, you can weather pretty much any economic storm.
