Let's say, purely as a hypothetical example, that you finished college in 1994 and went to graduate school for 4 years, and so you first started making enough money to be able to start seriously saving for retirement late in 1998. And let's say that, starting in January 1999, you've maxed out your Roth IRA every year, invested in an index fund that tries to match the S&P 500 because your retirement horizon is 40 years off. By the end of 2008, you've put $32,000 into the fund and it's worth... about $25,558.83 (using these numbers for the S&P 500 returns and assuming my math is right). By contrast, if you invested the same amounts from 1929 to 1938 -- you know, just before the stock market crash and through the Great Depression? -- your account would be worth $44,274.25. Arrrgh**.
Thank goodness this is just a thought experiment.
** it's true that the market bounced back in 2009, but even if we take this exercise through 11 years, the account begun in '99 is worth $38.8K (on $37K invested) while the one begun in '29 is worth $50.7K.
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