Hat tip to Barbara O’Neill (@moneytalk1) for tipping me off to this chart from Business Insider:

Questions:

• What would have been your annual return over this 20 year period if you just bought on December 31, 1993 and held?
• Reading the footnotes, what is the investment vehicle that is assumed for this chart?  Do you think this is an appropriate investment for the sake of this analysis?
• How much less would you have earned (in $ and percentage return) by missing the 10 best days during this 20 year period?
• Your friend tells you that he has a great system that figures out the best time to buy and sell into the market. What would you say to discourage him?
• Provide a headline to this chart in 6 words or less.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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