Best Long-Term Investment
The most profitable investment in the long term is in the stock market
It historically outperformed all other investments
Beyond real estate, and without all its constraints and fees
It allows to diversify
by geographical zones (USA, Europe, China…)
by sectors (industry, health, environment, telecom …)
by types of assets (stocks, indexes, bonds, commodities …)
liquidity is also one of the biggest advantages, You can sell your shares at any time of any day the market is open and get your money quickly
With the right portfolio there is almost nothing to do once it is created,
only a few adjustments
Evolution of the S&P500 index and the real estate, over 100 years, you clearly see in spite of the strong fluctuations, the performance of the stock market is clearly superior.
(source: https://www.longtermtrends.net/stocks-to-real-estate-ratio/ )
Average returns of different financial assets over a period of more than two centuries, stock market is, again, largely above.
(source: book ” Stocks For The Long Run“, written by Jeremy Siegel.)
You can do better than just follow the index
You can reduce risk and volatility in crash period
Even in times of stock market crash, some portfolios were slightly positive, others held up very well
annual returns of two portfolios between 1999 and march 2020
Portfolio 1 is a diversified portfolio
Portfolio 2 is only composed of US stocks
During the crises of 2000 and 2008
Portfolio 1 which is well diversified, was up 8% and 0,75%
Portfolio 2 100% stocks composed, at the same time lost 20% and 37%,
.
Diversified portfolios with good allocation, helps managing risk and reducing volatility because they are composed of non correlated assets
PERFORMANCE OF A 10-YEARS DIVERSIFIED PORTFOLIO (BETWEEN 2007 AND march 2020)
10,000$ invested in 2007, in march 2020 worth is 27994$
Now, same portfolio but this time you saved 1000$ every year that you had reinvested in this portfolio, will be 52318$ in march 2020
