Are you discouraged by the two severe bear markets of this decade, in 2000-2002 and 2007-2009? If you are still decades from retirement, you shouldn’t be. A study by fund manager T. Rowe Price indicates it is better to start buying during a bear market.
The study compared hypothetical investors who started buying stocks in 1929 and 1970 (before two severe bear markets) with those who started in 1950 and 1979 (before bull markets). Each investor contributed $500 each month to the equivalent of the S&P 500 index, for a total of $180,000 over 30 years. Dividends were reinvested.
* The 1950 and 1979 investors, who prospered early, both wound up with nearly $1 million, in this study. They had nothing to complain about.
* The 1929 investor suffered through the Great Depression but thrived in the post-World War II boom and wound up with nearly $2 million.
* The 1970 investor also started slowly but caught the great bull market of the 1980s and 1990s, winding up with well over $3 million.
Thus, if you keep investing now, accumulating shares at low prices, you’ll be well-positioned to cash in when the next bull market arrives.
