July 24

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Kennon Financial: The Most Important Stock Market Chart Ever? 

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 In each example, over 20 years, you would have withdrawn a total of $100,000 ($5000 per year for 20 years).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 Date End

Original

Investment

Total Withdrawals (5% per year) Annual Return

Ending

Value

12/31/1931 12/31/1951 $100,000 $100,000 11.40% $513,210
12/31/1932 12/31/1952 $100,000 $100,000 13.27% $766,022
12/31/1933 12/31/1953 $100,000 $100,000 10.15% $386,712
12/31/1934 12/31/1954 $100,000 $100,000 12.56% $660,031
12/31/1935 12/31/1955 $100,000 $100,000 10.63% $431,282
12/31/1936 12/31/1956 $100,000 $100,000 7.84% $219,962
12/31/1937 12/31/1957 $100,000 $100,000 12.37% $633,616
12/31/1938 12/31/1958 $100,000 $100,000 12.03% $589,235
12/31/1939 12/31/1959 $100,000 $100,000 13.08% $735,558
12/31/1940 12/31/1960 $100,000 $100,000 14.40% $966,123
12/31/1941 12/31/1961 $100,000 $100,000 16.91% $1,585,122
12/31/1942 12/31/1962 $100,000 $100,000 15.46% $1,194,776
12/31/1943 12/31/1963 $100,000 $100,000 15.13% $1,118,421
12/31/1944 12/31/1964 $100,000 $100,000 14.89% $1,066,591
12/31/1945 12/31/1965 $100,000 $100,000 13.39% $786,149
12/31/1946 12/31/1966 $100,000 $100,000 13.87% $867,869
12/31/1947 12/31/1967 $100,000 $100,000 14.87% $1,062,546
12/31/1948 12/31/1968 $100,000 $100,000 15.35% $1,169,095
12/31/1949 12/31/1969 $100,000 $100,000 14.07% $903,770
12/31/1950 12/31/1970 $100,000 $100,000 12.70% $679,685
12/31/1951 12/31/1971 $100,000 $100,000 12.15% $604,166
12/31/1952 12/31/1972 $100,000 $100,000 12.10% $597,148
12/31/1953 12/31/1973 $100,000 $100,000 11.74% $552,969
12/31/1954 12/31/1974 $100,000 $100,000 7.97% $227,119
12/31/1955 12/31/1975 $100,000 $100,000 7.57% $204,629
12/31/1956 12/31/1976 $100,000 $100,000 8.21% $241,785
12/31/1957 12/31/1977 $100,000 $100,000 8.98% $292,907
12/31/1958 12/31/1978 $100,000 $100,000 6.99% $174,859
12/31/1959 12/31/1979 $100,000 $100,000 7.03% $176,891
12/31/1960 12/31/1980 $100,000 $100,000 8.38% $252,335
12/31/1961 12/31/1981 $100,000 $100,000 6.57% $155,386
12/31/1962 12/31/1982 $100,000 $100,000 8.37% $251,568
12/31/1963 12/31/1983 $100,000 $100,000 7.80% $217,461
12/31/1964 12/31/1984 $100,000 $100,000 7.00% $175,399
12/31/1965 12/31/1985 $100,000 $100,000 7.25% $187,660
12/31/1966 12/31/1986 $100,000 $100,000 9.36% $321,308
12/31/1967 12/31/1987 $100,000 $100,000 7.91% $223,717
12/31/1968 12/31/1988 $100,000 $100,000 7.85% $220,163
12/31/1969 12/31/1989 $100,000 $100,000 10.32% $402,199
12/31/1970 12/31/1990 $100,000 $100,000 10.28% $398,713
12/31/1971 12/31/1991 $100,000 $100,000 10.60% $428,851
12/31/1972 12/31/1992 $100,000 $100,000 9.60% $340,207
12/31/1973 12/31/1993 $100,000 $100,000 11.98% $583,058
12/31/1974 12/31/1994 $100,000 $100,000 14.84% $1,055,377
12/31/1975 12/31/1995 $100,000 $100,000 14.36% $958,459
12/31/1976 12/31/1996 $100,000 $100,000 14.00% $891,251
12/31/1977 12/31/1997 $100,000 $100,000 16.44% $1,447,113
12/31/1978 12/31/1998 $100,000 $100,000 17.64% $1,818,318
12/31/1979 12/31/1999 $100,000 $100,000 17.70% $1,840,805
12/31/1980 12/31/2000 $100,000 $100,000 15.40% $1,180,094
12/31/1981 12/31/2001 $100,000 $100,000 15.50% $1,202,665
12/31/1982 12/31/2002 $100,000 $100,000 13.25% $763,294
12/31/1983 12/31/2003 $100,000 $100,000 13.34% $777,933
12/31/1984 12/31/2004 $100,000 $100,000 13.75% $845,961
12/31/1985 12/31/2005 $100,000 $100,000 12.38% $634,571
12/31/1986 12/31/2006 $100,000 $100,000 12.15% $603,834
12/31/1987 12/31/2007 $100,000 $100,000 12.30% $624,349
12/31/1988 12/31/2008 $100,000 $100,000 9.51% $332,734
12/31/1989 12/31/2009 $100,000 $100,000 8.92% $288,562
12/31/1990 12/31/2010 $100,000 $100,000 10.00% $373,397
12/31/1991 12/31/2011 $100,000 $100,000 8.57% $264,524
12/31/1992 12/31/2012 $100,000 $100,000 8.95% $290,416
12/31/1993 12/31/2013 $100,000 $100,000 9.73% $350,521
12/31/1994 12/31/2014 $100,000 $100,000 10.48% $417,526
12/31/1995 12/31/2015 $100,000 $100,000 8.58% $265,008
12/31/1996 12/31/2016 $100,000 $100,000 7.76% $214,933
12/31/1997 12/31/2017 $100,000 $100,000 6.33% $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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