Historical records from the U.S. shows that the stock index S & P 500 on average, delivered a return of 11.5 percent a year (including dividends. But the index can deliver extreme fluctuations on a yearly basis, which is why desktop stock tickers might not be the best tool when you go for a long term investment strategy.

Historically, there are a 60 percent chance that returns on a stock fluctuates between minus 6 and plus 31 percent in one year, statistics shows from the U.S.. This also means that there is a relatively high probability that the returns are more extreme – in either direction.

There is no golden method to predict when the extremes occur. Hence the best advice to try to make qualified assessments prior to investment and operating long-term if the strategy is to seek a stable and reasonable return.

Fluctuations is narrow over longer periods, shows historical data for S & P 500 index. Thus, the typical annual fluctuation in a 10-year period of between 6.6 and 16.5 per cent. in return. While the annual fluctuations in returns over a 20-year period is typically between 7.8 and 14.7 per cent.

It should be emphasized that there are obviously periods of 10 and 20 years which fall outside the above figures. But the point is, based on historical data from S & P 500, that with a 10 – or 20-year investment horizon in shares, there is a good probability of a good and stable returns. So thinking beyond 2009 is a good strategy.

No related posts.