Named one of Canada’s Top Wealth Advisors by the Globe & Mail in partnership with SHOOK Research.

Stock Market Risk Reduces with Time

Stock Market Risk Reduces with Time

March 29, 2021

Length of time invested in the stock market can help reduce the risk of losing money, writes Peter Watson.

Do not invest in the stock market if you have a short-term perspective.

Investing in the stock market for one day is basically a 50-50 proposition. More specifically, days the stock market increases in value is just 54 per cent.

That is how the stock market has performed over the last 70 years.

If you want success at investing, take a longer-term perspective. Then the odds can shift in your favour.

During the last 94 years ending in 2020, the years that the stock market gained was 75 per cent of the time. Far more favourable investing for one year versus one day.

Want better odds? Extend the time period to five years. Then the number of times the stock market gained was 84 per cent.

After 10 years the number of times the stock market gained was 95 per cent.

And finally, if you look at every 20-year period the stock market index increased in value 100 per cent of the time.

This information is based on the S & P 500 Index, which tracks 500 of the largest publicly traded companies in the US and as reported by AndCo Consulting and Crestmont Research.

The more time you are invested in the stock market the better odds at success.

We understand that stock market values can decrease. When it does that can be very upsetting to investors.

By having a longer-term perspective if the market declines, you have time on your side to be patient with the hopes that the market will recover.

In the past, being patient has been rewarded.

Every time the stock market has lost value in the past it has always recovered those losses and gone on to post new highs.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Peter Watson provides wealth management services through Watson Investments.