Kennon Financial: The Most Important Stock Market Chart Ever? 

The market is incredibly consistent - David Kennon

David Kennon, Kennon Financial

Whenever someone says to me, “The stock market hasn’t made me any money in the past six months” or “What happens if the economy tanks and I lose all my money?” I think to myself, “But it doesn’t matter.  It just doesn’t matter.  Investing in a diversified portfolio has never not worked.”

So what exactly do I mean by that?

This week I am going to give you a sneak peek into the appendix from my upcoming book: Spend More, Worry Less.

This data drives much of my advice and beliefs about investing and spending in retirement.   I believe that this data if truly understood, could take away all of your fears about investing money once retired.  I can’t emphasize this enough.  Please take the time to absorb the table below.

Appendix Explanation

The historical data below simply shows you what would have happened if you had retired in any given year (starting in 1931). Each “retirement” is assumed to last 20 years.

The first row reveals what would have happened if someone retired in 1931 with $100,000. The money is invested in the 500 largest companies in the U.S. (otherwise known as the S&P 500 Index).

Starting with $100,000, the chart shows what would have happened if you starting withdrawing $5,000 per year beginning the very first year of retirement. In each example, over 20 years, you would have withdrawn a total of $100,000 ($5000 per year for 20 years).

So, if you retired in 1931, over the next 20 years your money would have grown to $513,210- even though you withdrew 5% of the original investment each year.

If you retired in 1990, over the next 20 years the money would have grown to $373,397- even though you withdrew 5% of the original principal each year.

Important Points

  1. 100% of the scenarios result in you ending up with more money than you started with.
  2. The WORST period illustrated is from 1997-2017. Your original $100,000 would have ended with a value of $145,177 (even though you had been withdrawing $5000 per year for 20 years).
  1. The BEST period illustrated is from 1979-1999. Your original $100,000 would have ended with a value of $1,840,805 (even though you had been withdrawing $5000 per year for 20 years).
  1. The MEDIAN period illustrated is from 1953-1973 where your original investment would have grown to $552,969.
  1. This is absolutely amazing news.
  2. It is statistically correct to say, “Over the past 86 years, if you started with $100,000 and withdrew $5000 per year for 20 years, every time you would have ended up with more than the original investment.”

Hopefully, this blows your mind as much as it did mine!

Be Blessed,

David Kennon, Kennon Financial

 

Starting Retirement DateEnd

Original

Investment

Total Withdrawals (5% per year)Annual Return

Ending

Value

12/31/193112/31/1951$100,000$100,00011.40%$513,210
12/31/193212/31/1952$100,000$100,00013.27%$766,022
12/31/193312/31/1953$100,000$100,00010.15%$386,712
12/31/193412/31/1954$100,000$100,00012.56%$660,031
12/31/193512/31/1955$100,000$100,00010.63%$431,282
12/31/193612/31/1956$100,000$100,0007.84%$219,962
12/31/193712/31/1957$100,000$100,00012.37%$633,616
12/31/193812/31/1958$100,000$100,00012.03%$589,235
12/31/193912/31/1959$100,000$100,00013.08%$735,558
12/31/194012/31/1960$100,000$100,00014.40%$966,123
12/31/194112/31/1961$100,000$100,00016.91%$1,585,122
12/31/194212/31/1962$100,000$100,00015.46%$1,194,776
12/31/194312/31/1963$100,000$100,00015.13%$1,118,421
12/31/194412/31/1964$100,000$100,00014.89%$1,066,591
12/31/194512/31/1965$100,000$100,00013.39%$786,149
12/31/194612/31/1966$100,000$100,00013.87%$867,869
12/31/194712/31/1967$100,000$100,00014.87%$1,062,546
12/31/194812/31/1968$100,000$100,00015.35%$1,169,095
12/31/194912/31/1969$100,000$100,00014.07%$903,770
12/31/195012/31/1970$100,000$100,00012.70%$679,685
12/31/195112/31/1971$100,000$100,00012.15%$604,166
12/31/195212/31/1972$100,000$100,00012.10%$597,148
12/31/195312/31/1973$100,000$100,00011.74%$552,969
12/31/195412/31/1974$100,000$100,0007.97%$227,119
12/31/195512/31/1975$100,000$100,0007.57%$204,629
12/31/195612/31/1976$100,000$100,0008.21%$241,785
12/31/195712/31/1977$100,000$100,0008.98%$292,907
12/31/195812/31/1978$100,000$100,0006.99%$174,859
12/31/195912/31/1979$100,000$100,0007.03%$176,891
12/31/196012/31/1980$100,000$100,0008.38%$252,335
12/31/196112/31/1981$100,000$100,0006.57%$155,386
12/31/196212/31/1982$100,000$100,0008.37%$251,568
12/31/196312/31/1983$100,000$100,0007.80%$217,461
12/31/196412/31/1984$100,000$100,0007.00%$175,399
12/31/196512/31/1985$100,000$100,0007.25%$187,660
12/31/196612/31/1986$100,000$100,0009.36%$321,308
12/31/196712/31/1987$100,000$100,0007.91%$223,717
12/31/196812/31/1988$100,000$100,0007.85%$220,163
12/31/196912/31/1989$100,000$100,00010.32%$402,199
12/31/197012/31/1990$100,000$100,00010.28%$398,713
12/31/197112/31/1991$100,000$100,00010.60%$428,851
12/31/197212/31/1992$100,000$100,0009.60%$340,207
12/31/197312/31/1993$100,000$100,00011.98%$583,058
12/31/197412/31/1994$100,000$100,00014.84%$1,055,377
12/31/197512/31/1995$100,000$100,00014.36%$958,459
12/31/197612/31/1996$100,000$100,00014.00%$891,251
12/31/197712/31/1997$100,000$100,00016.44%$1,447,113
12/31/197812/31/1998$100,000$100,00017.64%$1,818,318
12/31/197912/31/1999$100,000$100,00017.70%$1,840,805
12/31/198012/31/2000$100,000$100,00015.40%$1,180,094
12/31/198112/31/2001$100,000$100,00015.50%$1,202,665
12/31/198212/31/2002$100,000$100,00013.25%$763,294
12/31/198312/31/2003$100,000$100,00013.34%$777,933
12/31/198412/31/2004$100,000$100,00013.75%$845,961
12/31/198512/31/2005$100,000$100,00012.38%$634,571
12/31/198612/31/2006$100,000$100,00012.15%$603,834
12/31/198712/31/2007$100,000$100,00012.30%$624,349
12/31/198812/31/2008$100,000$100,0009.51%$332,734
12/31/198912/31/2009$100,000$100,0008.92%$288,562
12/31/199012/31/2010$100,000$100,00010.00%$373,397
12/31/199112/31/2011$100,000$100,0008.57%$264,524
12/31/199212/31/2012$100,000$100,0008.95%$290,416
12/31/199312/31/2013$100,000$100,0009.73%$350,521
12/31/199412/31/2014$100,000$100,00010.48%$417,526
12/31/199512/31/2015$100,000$100,0008.58%$265,008
12/31/199612/31/2016$100,000$100,0007.76%$214,933
12/31/199712/31/2017$100,000$100,0006.33%$145,177

 

Investments are not FDIC – insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. 

Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. 

Regular investing does not ensure a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining. Market indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index. Results for the Lipper indexes do not reflect sales charges. There have been periods when the fund has lagged the index.

The illustration included herein does not reflect the effects of taxes in some or all of the investments. The Rolling Periods Report shows the selected security’s total return performance over different periods of a specified length. For example, a report might show all of the three year rolling periods between 1980 and 1995. The report indicates in its sub-heading the length of the periods and the time frame it covers. Information on the initial investment, sales charge, reinvestment of dividends, and reinvestment of capital is displayed above the column headings. These figures reflect historical data and are not indicators of the security’s future performance. 

Keep in mind that indices are unmanaged and their results do not reflect sales charges, commissions or expenses. Additionally, they should only be used for general comparisons over meaningful time frames. S&P 500 with Monthly Dividends is an unmanaged market capitalization weighted price index composed of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and Over-The-Counter market. The value of the index varies with the aggregate value of the common equity of each of the 500 companies. The stocks represented by this index involve investment risks which may include the loss of principal invested.

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