The study makes its point in dramatic fashion by pointing out that a 30-year investment that began in 1929 ended with a total gain of 960%. The investor who started in 1970 fared even better: 1,753%.
By comparing the results with investors who began saving during bull markets in the 1980s and 1990s, the four investors did twice as well with their money.
"As counterintuitive as it may feel, it is actually a silver lining that the prices have gone down," says Stuart Ritter, assistant vice president of T. Rowe Price Investment Services. "For young investors still in the accumulation phase, it is better to have the bear market first, because then you buy a whole lot of shares at a lower price than when the bull market hits."
Ritter, who also teaches a class on personal finance at Johns Hopkins University in Baltimore, says the younger generation is starting to embrace that message despite rampant pessimism."They see older people panicking, and they understand why," he says. "But they are saying, 'Gee, 2008 felt bad and people worried about it, but I'm 22 years old and it's a long time before I am going to use this money.' It is a little bit easier for them to put 2008 in perspective, which I find interesting because, for their investing lifetime, 2008 represents all of it. But they are still pretty good at putting it in perspective and saying, 'It is just one year. I have a whole lot more ahead of me.' "
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV