For example, a $100,000 investment into large-cap stocks would’ve lost 43% of its value during the dot-com crash in the early 2000s, and been reduced to $57,000 by the end of 2002. It wouldn’t have gotten back to its original value for five years. But by the end of 2020, 18 years later, it would be worth 354% more, despite losing another 37% in 2008. This is illustrated in the table below.
It is for this reason that you should always consider your time horizon when investing. The longer you have until you need the money, the more aggressive your holdings can be, and the shorter the time period, the more conservative they should be. And money that you need over the next year or two should be kept out of the market completely.
Investment in 20025 Years Later10 Years Later15 Years Later18 Years Later$57,000$104,000$113,000$235,000$354,000