When will I see a gain?

Article author
Alexander G.
  • Updated

We can't predict the performance of your investments— there’s no way to predict the future! The Great Depression was the biggest and longest stock market drop in history. Looking at extreme situations like this can help investors plan their current strategies.

  • Hypothetical Investor A: invested once in the S&P 500 in September 1929 when the market was high. They sold when it hit its lowest point in June 1932, losing 86%.
  • Hypothetical Investor B: invested once in the S&P 500, also at the market high in 1929, and didn’t see a gain until September 1954. 
  • Hypothetical Investor C: invested weekly into the S&P 500, each in the same size and with the first investment also taking place at the 1929 market high. They saw a gain by September 1935. 

Investor A never sees a gain as they effectively lock in their losses by selling at the low point. Investor B sees a gain after 25 years, having only made one investment and never another. Investor C, after 6 years of passively investing in the market, sees a gain for themselves nearly 20 years before the market ends up reaching a new high again. 

The takeaway? When you see a gain ultimately depends on how the market performs and what actions you take or don’t take as an investor. 

Of course, the Great Depression was very extreme. After that, every other downturn went from a low point and back up to a new high again in about  3 years! But even in the extreme case, we can see the benefits of staying actively invested for the long term. The stock market has returned about 10% a year, on average, throughout history (including those Great Depression years!). 

For more on what you can expect from investing in the stock market, check out Learn in your Acorns app.

The hypothetical calculation is for illustrative purposes only. Such results do not predict or represent the performance of any Acorns portfolio and do not take into consideration economic or market factors that can impact performance. Actual clients will achieve investment results materially different from those portrayed.

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