I was using a compound interest calculator (an old freeware version I had) and I decided today to look at some WORST (well reasonably worst I believe) case scenarios using low savings rates and being FULLY invested (no cash) and continually investing all along.
I used a very manageable (in most people's cases I would assume) small sum of $200 a month. I wanted to use extremes for my point and figured $200 was something even people with tight budgets could afford.
So I started with an initial $50k investment. Some may start with only $5000 or $10000 or $0 it doesn't matter.
So I also dialed in an interest rate of only 3% assuming a very low rate of return. It's still not beating inflation in real terms but is what it is. Again these are imo worst case scenarios. For all I know the sp500 could be at 2500 5 years from now but I would hope not.
So with a starting initial deposit of $50k and $200 a month after 5 years I ended up with $70706. Deposits of $12k over those 5 years and interest of $8706.
If I changed the contribution rate to $433 a month or $5200 a year I ended up with $85550 after 5 years.
So assuming the sp500 is at 4100 now and the 5 year return is 15% total the sp500 would be at 4715 5 years from now.
I would assume this is a very worst case scenario.
For example a lot of my portfolio is in names like MSFT AAPL and UNH etc. I'm sceptical that those stocks will only return 15% total in 5 years.
So I think it helps to have maybe 50% in something like VTI and maybe the rest made up of blue chip large caps like MSFT GOOGL AAPL NVDA ASML UNH HD SHW etc. Maybe only 10 to 15 or so stocks total.
So my advice is to keep investing and to think 5 years out and ignore all the short term noise.
Yes, I'm currently almost 50% cash and looking for a 3500 entry point into VTI to begin adding, but the easiest thing would probably be to just keep adding into VTI regularly and ignore everything!
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