It’s hard to find good financial news lately, so today I thought I would take a step back and look at a longer period of time. It’s easy to get get caught up in the day-to-day headlines, but if you are going to reach financial independence and retire early (FIRE), you have to be focused on the big picture.
The chart below shows the S&P 500 annualized returns for six different periods of time. In the short-term, year-to-date returns are down a brutal -20.1%. They are better, but a still ugly -12.3% from this day last year. Still, the chart shows that we have had a solid run of growth over the last 2, 3, 5, and 10 years.
That’s what we invest for – the longer term – right?
I’m not dumb enough to tell you what’s going to happen in the future, but I’m sure glad to see that over the last 10 years we’ve gotten an 10.5% annualized return rate. This doesn’t even include the value of dividends (right, Klaus?)! I early retired more than 6 years ago, so it’s terrific that we’ve had such a nice run early in my goof-off years.
Coincidently, the average 10.5% annual increase in the S&P 500 is spot-on with it’s average growth rate back to the 1920s.
I know it’s easy to think about how much better we would be if the market had held it’s highs from the end of 2021, but that’s water under the bridge. (The 10-year annualized return would have been 13.0%, if you are really interested).
Still, all we can do at this point is hope that things start to turn the corner soon … with better returns and lower inflation. If we can get through this rough patch, maybe we’ll see another 10 years of solid returns. Here’s hoping.
Are you finding it hard to focus on the long-view lately?
Image Credit: Pixabay