Market Protection Once You Retire
What would happen if you retired the year of a crash?
Think it
cold never happen again? Guess again! The 2000 -- 2003 bear
market wiped out more than the 1929 decline. And guess what, inspite
of the recent rally it may not be over.
In 1929
a 65-year old investor need to wait 25 years until they were over 90
years old to get back what they had in ’29. And that only if they
didn’t need to spend any of there invested funds. Highly unlikely.
In 1974 a 65 year-old retiree only had to wait until their 72nd birthday
to break even. The problem is that after declines like these fear forces
these investors to sell out of the market and they never break even.
Don’t think this could ever happen again? Are you willing to bet
you retirement on it? Me neither!
Buy and sell investing with out an entry and exit strategy is like driving
without a stop lights. Sure every things great for a while, but sooner
or later there is going to be a crash.
The rich can't make their investments grow any faster than yours do
but they get out before you do. In fact 70 to 80 percent of mutual buy
and holder fail. If you are invested and the market is going up then
you are making money. If the market is going down and you are invested
then you are not only losing money but you are losing time. It is really
that simple.
Every time you lose money in a down market you lose valuable time.
Time is
the investment element that can never be
regained.
This table shows how long these drops last and the lifetime spent getting the money back.
|
Bear Market
|
Duration
|
% Decline
|
Time Needed
To Break even
|
|
Sept. ’29 – June ‘32
|
33 months
|
-86.7
|
25.2 years
|
|
July’33 – Mar. ‘35
|
20 months
|
-33.9
|
2.3
|
|
Mar.’37 – Mar. ‘38
|
12 months
|
-54.5
|
8.8
|
|
Nov. ’38 – Apr. ’42
|
41 months
|
-45.8
|
6.4
|
|
May ’46 – Mar. ‘48
|
22 months
|
-28.1
|
4.1
|
|
Aug. ’56 – Oct. ‘57
|
14 months
|
-21.6
|
2.1
|
|
Dec. ’61 – June ‘62
|
6 months
|
-28.0
|
1.8
|
|
Feb. ’66 – Oct. ‘66
|
8 months
|
-22.2
|
1.4
|
|
Nov. ’68 – May ‘70
|
18 months
|
-36.1
|
3.3
|
|
Jan. ’73 – Oct. ’74
|
21 months
|
-48.2
|
7.6
|
|
Nov. ’80 – Aug. ‘82
|
21 months
|
-27.1
|
2.1
|
|
Aug. ’87 – Dec.‘87
|
4 months
|
-33.5
|
1.9
|
|
July ’90 – Oct. ‘90
|
3 months
|
-19.9
|
.6
|
|
July ’98 – Aug. ‘98
|
1.5 months
|
-19.3
|
.25
|
|
Mar.’00 -- Mar. 03?
|
36 months+
|
-72
|
?
|
In an average 10-year time frame an investor spends 6.6 years of their
time losing money then trying to break even. Leaving only 3.4 years
of profitable growth. This is a tough way to make a respectable return
and that’s not how the Rich Invest.
|
