Sam Parr explains how $6,000 yearly into an S&P 500 fund grows to over $1 million by retirement. He sold everything at the COVID crash and watched the market rebound, a costly mistake. Over the past decade 97% of active fund managers underperformed the index. Missing the best 20 days cuts your returns to nearly zero.
If you invested only $6,000 a year into the S&P 500, by retirement you'd have over $1 million. But here's the trap. This happens a lot to young men. This happened to me when I was younger. It's thinking that you are smarter than the market and you're in a rush. Now, let me tell you some facts. Over the last 10 years, 97% of active stock fund managers, they underperformed the index. These are people whose job relies on making money off of stocks and they still can't beat the index funds. And I've done this before. At the bottom of the market during COVID I sold sold all of my positions and then it ripped right back up. And I have lost a fortune because of that mistake. It's not about timing the market, it's about time in the market. Over the past 20 years, if you were to stay in the market, you would have made roughly 10% a year. Your money doubles every 7 years. However, if you missed the best 10 days, your returns halved to about 5%. And if you missed the best 20 days, your gains would be almost exactly zero.
