Why the Stock Market and Financial Habits Align with Your Wealth

Lovely and Lawrence discuss the stock market and the goal of diversifying your life’s purpose. The average return of the stock market over the long term is just above 10%, as measured by the S&P 500 index. Over the past decade, through to June 30, 2023, the annualized performance of the S&P 500 was north of 10%.

As the standard investment disclaimer warns, past performance is no guarantee of future results. However, reasonable expectations can be made about future stock market performance based on long-term averages. For example, the average historical return for the stock market is roughly 10%, which is a reasonable forecast for a long-term period, such as 10 years or more.

The average stock market return is 10%. However, not every period in the market is average, and not every investor’s portfolio is average. What this means is that investors are wise to assume returns lower than 10%, such as 7-8%, when forecasting the long-term performance of a portfolio of stocks.

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Why Should You Invest in the Stock Market?

According to Investor.gov, “Stocks offer investors the greatest potential for growth (capital appreciation) over the long haul.” Over long periods, say 15-20 years, even an average household with an index ETF is rewarded with strong, positive returns.

If you invested $100 in the S&P 500 at the beginning of 2012, you would have about $422.62 at the end of 2023, assuming you reinvested all dividends. Furthermore, investing even $100 per week for 40 years would yield more than 1 million dollars.

For example, if you invested $1,000 in SPDR S&P 500 ETF Trust SPY just 10 years ago, you’d be $575,000 richer. With named holdings like Tesla $TSLA and Nvidia $NVDA, which had respective annualized gains of 41.83% and 56.96% over the past 10 years, long-term investors watched their share value grow. You can also win for the long term with the simple strategy of buying low and holding for later.

The power of compounding your dollars through asset accumulation works.

Beyond this Stock Market Convo, Connect With Us:

The Financial Griot is a play on two words (Finance + Griot) that hold significance in closing the wealth gap while embracing our differences. We tell the stories that others don't. Stories about growth, opportunity, and embracing changes. Beyond that, we talk about health, the stock market, term life insurance, and all things financial planning.

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Alainta Alcin - Blogger, Travel and Money Enthusiast @alainta_alcin
Lovely Merdelus - Entrepreneur and Small Business Growth Specialist @lovelymerdelus
Lawrence Delva-Gonzalez - Federal Auditor, Blogger, and Tax Specialist @theneighborhoodfinanceguy