In a long-needed comeback week for the stock market, the Dow added 800 points while the S&P tallied 116. Considering the circumstances with rising inflation, supply-chain shortages, and dismal stock market performance in 2022, this was a much needed win for Americans.
The Dow hit it’s all-time high of 36,799.65 in January of this year, while the S&P 500 struck a high of 4,766.18 in December of 2021. This leaves us around 14.4% down from the Dow high and 17.9% from the S&P high. You probably thought it was worse than that, didn’t you?
Stocks continue to rise
Don’t forget, the S&P 500 has averaged around 10% returns since inception. You heard that right, 10% since 1957. Not to shabby for a “set it and forget it” investment.
Note that this wasn’t readily available until the creation of the first index fund by John Bogle, founder of Vanguard, in 1976. Prior this, you would have needed to create your own group of investments that mirror the index in order to achieve comparable results. Quite difficult. Today, you can choose a fund like the Vanguard Total Stock Market Index Fund (VTI) which does all the work for you.
Stick to your plan
If you’re still more than 5 years from retirement, you shouldn’t be freaking out over market fluctuations. Stick to your accumulation plan and make sure you have an asset allocation that fits your risk tolerance. Invest early, invest often, and stop checking your account balances.