I Will Teach You To Be Rich: No guilt, no excuses - just a 6-week programme that works

by Ramit Sethi

Pundits and the media know exactly how to get our attention: flashy graphics, loud talking heads and bold predictions about the market that almost never come true. These may be entertaining, but let’s look at actual data that will shock you. Putnam Investments studied the performance of the S&P 500 over fifteen years, during which time the annualised return was 7.7%. They noted something amazing – during that fifteen-year period, if you missed the ten best days of investing (the days where the stock market gained the most points), your return would have dropped from 7.7% to 2.96%. And if you missed the best thirty best days, your returns would have dropped to -2.47% – negative returns!. In actual dollar values, if you’d invested $10,000 and kept your money in the market over those fifteen years, you’d end up with $30,711. If you missed the ten best investing days, you’d end up with $15,481. And if you missed the thirty best investing days, you’d end up with $6,873 – less than you began with. This maths is startling. It makes you wonder about the certainty of friends and pundits, who say it’s “obvious” that the market is going down. Ignore them. It may feel good to try to predict where the market is going to go. But candidly, when it comes to investing and compound interest, your feelings will lead you astray. The only long-term solution is to invest regularly, putting as much money as possible into low-cost, diversified funds, even in an economic downturn. This is why long...