The ONE Thing You Should Do in 2023
While speaking at a conference in Tokyo last month, I mentioned that I started investing when I was 22 years old. During the question-and-answer session, I was asked what motivated me to invest at such a young age.
My answer: “Fear.”
I wasn’t making much money in my first job out of school, working for a small ad agency in very expensive New York City. At the time, I couldn’t imagine how I’d ever retire. When I stumbled across a few investment articles that outlined how much my money could grow over the long term, I had my answer.
I started right away, and I haven’t stopped since. I started small. I was making only $18,000 a year – before taxes. But that $100 or so I invested each time I had it was the initial seed that made my portfolio grow to what it is today.
What You Can Do
No one knows for sure how the market will perform in 2023. But the most important thing you can do for your wealth and your family is invest this year.
If you’re a new investor, start now. If you’re experienced, continue putting money to work.
It doesn’t matter whether you believe the country or world is falling apart, a recession is imminent, or the market is overvalued or undervalued.
We know definitively that time is the most important element to an investor’s success. The longer you’re invested, the more wealth you’ll accumulate.
Can the market be scary?
Absolutely. Sometimes it goes down and it can make your stomach feel like you ate a bad batch of clams casino. But consider…
- From 1974 to 2017, the market generated negative five-year returns in just seven out of those 44 years. And the largest annualized loss over five years was just 2%.
- During the same period, the average five-year annualized gain in the other 37 years was nearly 11%. The median was 14%, which would double your money every six years.
- Since 1975, the market has ended the year down only 11 times out of 47.
- Since 1927, over 10-year periods, the market has been down only seven times. Each occurrence was when the 10-year period ended during the Great Depression or Great Recession. So you would’ve had to have had historically terrible timing to lose money over a 10-year period in the last 95 years.
And remember, during all of those periods, we had war, political unrest, financial disasters and plenty of other reasons to believe everything was rotten. And yet the market continued to chug higher, posting excellent long-term results.
How to Do It
My go-to strategy is investing in dividend growth stocks. My goal, using my proprietary 10-11-12 System – featured in my book Get Rich with Dividends and my newsletter, The Oxford Income Letter – is to generate 12% average annual total returns with dividends reinvested.
If you were to earn 12% per year, look at how your money would grow. An investment of $10,000 earning 12% per year would be worth…
- $17,623 in five years
- $31,058 in 10 years
- $54,375 in 15 years
- $96,463 in 20 years
- $170,000 in 25 years.
And as I’ve shown you, the odds of the market cooperating over five years are very strong. Over 10 years, it’s practically a lock – unless that 10-year period ends during a financial calamity.
Remember, people still made money when they were invested during the Great Depression and Great Recession as long as they didn’t take their money out near the bottom. If you had withdrawn your funds in 2010, shortly after the Great Recession ended, you’d have still made money.
If you’re new to investing, you don’t have to do it all at once. Start with a little bit now, and add more to your portfolio either once per month or once per quarter. If you’ve already invested, continue to add funds on a regular basis.
Past performance is not a guarantee of future results, but nearly a century of data is a pretty good sample size.
You don’t have to be 22 years old to take advantage of what the market has to offer. Even growing your portfolio by 76% over five years can make a very meaningful difference in your and your family’s life.
The most important financial decision you can make in 2023 is to ignore all of the news and invest now.
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