Stock Market: The Trend Is Your Friend

(Drivebycuriosity) - Recently I found 2 info charts which are very helpful. So I write about them. The first chart shows the total return (stock gains plus dividends reinvested ) of the US stock market (represented by S&P 500  bloomberg). You could double your money if you had invested in 2007 @ the stock market peak before the huge downturn, in spite of recession & stock market crash of 2008.

The second chart displays the climb of the S&P 500 (without dividends) since 1950. On average the stock market gained 6.8% annually.

It is remarkable that the 10 years period (since 2007) brought about the same result (average annually gains of about 7%) as the long term trend. The 2008 crash didn´t change that. As both charts indicate, the stock market always snapped back after a sharp decline, erasing the losses. The trend is your friend.

If you have some money which you don`t need immediately, say savings for retirement, you do well if you invest it into stock market by buying an index fund or an ETF on the S&P 500. You need some patience and some stamina to ride through the setbacks and crashes, but the reward is high.