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Originally Posted by VJW
I really don’t consider 5 years to be “long term”.
That’s what conventional wisdom said five years ago.
But it hasn’t:
1901-1921, real returns averaged 0.2%/year
1929-1949, real returns averaged 0.4%/year
1966-1986, real returns averaged 1.9%/year
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I was focusing more on the "longish term"--five years isn't long term for me either. But it wasn't me who made that distinction, to the original poster and/or his "someone" it obviously is.
And again, if you take what I said in wholistic context "I'd be one of those "nuts" that keeps investing in equities through thick and thin because I know eventually it will rise and my money will go up with it. Always has before and I'm willing to take risk to gain a higher rate of return."
Eventually it HAS risen, if I had invested in those years you mentioned and held on, I would have made money--the market has inherent risk, thusly the rewards are also going to generally be higher than those of guaranteed stature. Sometimes the market goes up, sometimes down--for years at a time even--but it has always eventually rebounded.
Edit: And it is also a personal choice. I would rather risk my money for larger returns than have it stuck in a fixed situation, some people would rather not. If I NEEDED that money in 5 years for a house for instance, I would still put it in a well diversified mutual fund for a few years. Could you stick it in bonds etc instead? Sure, but you won't have the capability of generating the returns equities give you. To each his own.