Calculate How Long Till Your Portfolio Recovers

How long will it take your portfolio to recover from this financial Armageddon? NYT’s cool calculator tells me it’s going to take about three years. Check it, just punch in how much your portfolio was worth at its peak, its current value, how much you contribute on a regular basis, and play with the annual return. It generates a nice Times-quality graph of how long it’s going to take you to get it all back, and what the outlook is for years to come. Good way of putting the whole shebang in perspective.

Calculate Your Financial Comeback [NYT]

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  1. Meetloaf13 says:

    I would take something like this with a grain of salt…

    EXAMPLE:

    A few years back I lived in Maryland for a couple years. My first year there, they had one of the driest years in past century…newscasters and farmers were raving about how bad it would bein the years to come. Experts said that many wells were dried up completely…they said it would take 10 years for the wells to be back to normal levels.

    My second year in Maryland, it was one of the wettest years of the century…within the first half of the year, most wells were 10 ft higher than they were 2 years prior.

    SO, think what you want about these “forecasts”…ESPECIALLY in light of the last year.

  2. Fatty Shcock says:

    Now, what if I never started a financial portfolio, but wanted to. Would now be the best time?

    Also, how would I go about it? I don’t know much about stocks and whatnot, seeing how I never took an interest in it from the beginning.

    • ClutchDude says:

      @xAnarChisTx: Exactly. I’ve got a job, thankfully, and am wondering if now is the time to buy stock in companies that are being affected by the market, not their own actions.

    • Necoras says:

      @xAnarChisTx: Absolutely this is a good time. This is the “Low” in the “buy low sell high” advice. The best idea is to go to your employer and get into a company provided 401K plan. Likely they’ll have some sort of matching, whether it’s $.50 on the dollar or dollar for dollar. If it’s dollar for dollar up to a certain point (mine’s that up to 6%) then you’ve just made a 100% return on that amount of your investment.

      If there’s no company plan available first find a better job, and second look into somewhere like TRowe Price. I believe they’ll let you setup an IRA or 401K which automatically deducts from your paycheck. Auto deductions are the best in that they’re a)automatic and b)pre tax(in the case of a 401K).

      Alternatively you can start doing research about individual companies and buy stock at a place like TD Ameritrade or ETrade.

    • stevejust says:

      @xAnarChisTx: Is your anarchy logo a joke?

      If so, you might be better off holding on to your values. After all, the 401(k) buy-in is probably just a swindle by the MAN to have the lower classes buy into the system, so that the teacher pensions and Union 401(k) investments are all plugged into and dependent on the same machine they profit from. This way, they create false consciousness among the working classes so that the idea of environmental regulations preventing poor innocent ExxonMobil from earning more billions of dollars all of a sudden seems like an affront to anyone who has money in the market.

      But more seriously, I invested the max contribution last year and will again this year. With the 28% loss I’ve already suffered, It is almost like starting over from the very beginning. According to this NYT website and assuming a 5.6% return which could be optimistic, I will hit the pie-in-the-sky Million Dollar mark only one year sooner starting from the 28% loss than if I created the 401(k) today and started with no money in it. So if you’re going to get into the market, now may be as good a time as any.

      That said, some people can afford to lose money in the short run, others can’t. You need to make sure you have money to throw away and that you are okay with that before you invest. Because anyone that tells you they know what’s going to happen is probably full of excrement.

      I can tell you the best thing you can invest in are things that lead to your own self-sufficiency. What good is investing in gold you can’t even touch when the power goes out? No, the things that are most valuable are arable land, the knowledge of how to grow, prepare, preserve your own food, how to find and purify water, solar panels or wind turbines to make your own electricity, maybe a biodiesel still to make your own fuel. Self-sufficiency is more valuable than all the gold in the world.

    • Eyebrows McGee (now with double the baby!) says:

      @xAnarChisTx: If you can buy when blood’s running in the streets, that’s always the best time to buy!

      If you don’t have a company retirement plan (or want to invest outside it as well), we’re very happy with our Fidelity account.

      Conventional wisdom says index funds are the best way to go — they track the market, have very low fees, and tend to overperform other mutual funds over time. We typically put about half our investment into index funds and those “lifecycle” funds (that adjust your investments as you age to seek aggressive growth when you’re young and get more conservative as you age). The other half I like small cap funds, international indexes, and contrafunds (more risk, more potential reward). My husband likes to do tons of research and invest in individual stocks.

      But if you just want to invest, index funds and “lifecycle” funds are the “set-it-and-forget-it” of the mutual fund world, and a pretty reliable way for a beginner to get started!

    • Pixelantes Anonymous says:

      @xAnarChisTx: Invest in an index fund.

      • dragonfire81 says:

        @Pixelantes Anonymous: I’ve never really seen the point in investing. I’d rather just keep my money in a savings account with decent interest rather than invest it in something which may or may not generate any returns, even if heavily researched beforehand.

        I’ve never been in a position to earn enough money to really invest anything. I’m in my late 20s and the highest earning job I ever had was around 22K a year I think (I currently make less due to being laid off and having to take a lesser paying position). I’ve never had a chance to get in on a 401K or other similar things.

    • Chongo says:

      @xAnarChisTx: I just started investing for the first time in my life. I used sharebuilder.com to buy some stocks with my christmas bonus. Companies like Intel and G.E. are about 1/4 of the price as they were last year… so history says that I should make some money.

      There is a lot more to it of course, and never EVER put your all your eggs in one basket. However I think if you have money that can be completely written off to your budget, then invest where you can!

      • Eyebrows McGee (now with double the baby!) says:

        @Chongo: “There is a lot more to it of course, and never EVER put your all your eggs in one basket.”

        And that basket is bigger than just your investments — it’s also your job, your employment sector, and your local economy! If you work in a town whose economy is driven by a single employer (Peoria & Caterpillar) or a single sector (Charlotte & banking), you probably shouldn’t be investing too much in that company or that sector no matter how attractive they are. If they’re hit hard by a downturn, your job and your local economy and your property values will be shaky … keep your investment portfolio in other sectors!

        Similarly, there’s nothing wrong with owning some shares in your employer, especially for companies that have ESOPs, but if your employer goes bankrupt, you’re out your job AND your investments (Enron). Diversify your ENTIRE monetary life, not just within your investment portfolio!

        The difficulty is that if you live in a one-company town, you probably know an awful lot about that company and it’s hard to resist investing in a company you know is performing well. :)

  3. teamcoltra says:

    Because the New York Times knows if the economy is going to crash again, or have a hiccup…. if they had all these great skills in predicting the stock future… why didn’t they guard us from this?

  4. Ben Popken says:

    @teamcoltra, @Meatloaf13: It’s really not like they’re poking through birds’ bones, it’s a simple formula, like:

    *assuming your portfolio was this
    *assuming you put in this amount of money
    *assuming the rate of return will x (which you select)
    *and assuming y rate of inflation…

    …how long will it take to come back.

    That’s not soothsaying, that’s basic algebra.

    • teamcoltra says:

      @Ben Popken: ;) I failed Basic Algebra….

      Which I guess explains why it makes no sense.

    • driggity says:

      @Ben Popken: So what you’re saying is that it doesn’t provide any useful information? Awesome!

      Considering that we don’t know jack about what average rates of return or what the rate of inflation is going to be I don’t see how this provides a bit of useful perspective.

      • GildaKorn says:

        @driggity: The tool includes average rates of returns, and allows you to tinker. It’s a simple way for you to see what returns you would have to see to get your money back in however many years. It’s not designed to give you one number that you’ll hold on to for N years. You can even try entering different levels of inflation. Sheesh.

        • driggity says:

          @GildaKorn: If you just tinker with rate of returns then it works the same as any of the plethora of investment calculators that have been around for years except that this one tries to draw attention by using people’s fears based on how much the value of their investments have dropped. And if you’re looking at the somewhat short term to see when you’ll get your money back then historical long term averages probably aren’t going to be useful. I just don’t see how this provides any new perspective.

  5. rpm773 says:

    I look forward to 30 years of 3% inflation and a 20% annual rate of return. Thanks, NYT!

  6. Maulleigh says:

    27 years. That can’t be right!

  7. Apeweek says:

    The only thing this calculator “puts in perspective” is how far people (and their willing media) will go to delude themselves about where the stock market and the economy are going.

    Sure, punch in some numbers and feel better.

    • Chongo says:

      @Apeweek: History says that the stock market will come back. If it dosn’t, we all have much more to worry about then our investments.

      Bottled water, canned soup and some shotguns come to my mind.

      • Apeweek says:

        @Chongo:

        Past market downturns after economic trouble as serious as this have lasted a decade or two. Take a look at a long term chart of the market. Look at the 1960s – 1970s. Look at the market after the great depression.

        That’s past my retirement horizon.

        The widget in question seems to want us to assume that the “never ending bull market” will be back under way soon. That’s not happening. At best, we’ll get sideways motion for a decade or more. You can still make money with some market timing.

        • Chongo says:

          @Apeweek: cool thanks!

          I only put 1k into it so I’m not going to break the bank any time soon. I also don’t expect that 1k to become 1 million… but I do hope that its at least SOMETHING!

      • Eyebrows McGee (now with double the baby!) says:

        @Chongo: All the Armageddon planning sites tell you to stockpile hammers and other simple hand tools. Nobody will want your gold after society crumbles, but your hand tools and spare ammo will have great trade value!

        Now get away from my box of hammers!

  8. Kevin Maloney says:

    I think we should all invest in NY Times stock, since they apparently have a crystal ball that will tell them when the economy will bounce back. :-)

    Seriously, we haven’t seen the bottom of this thing. Until we do, it’s kinda hard to predict when we will recover.

    Kevin Maloney

    How Much Would You Like To Make This Month?
    [www.gdimagic.com]

    • GildaKorn says:

      @Kevin Maloney: How can it simultaneously be easy to know when we are in the bottom of this thing, and not know when we will recover? It seems like they’re both predictions.

    • trujunglist says:

      @Kevin Maloney:

      Thanks for the nice comment, it was pretty good, but seriously go fuck yourself with spamming your scammy get rich quick pyramid scheme website on the #1 anti-scam/pro-smart consumer blog on the internet. You must have balls the size of Texas, so I can’t really harsh you too much, but yeah – get the fuck out.

  9. Quilt says:

    It’s the greatest sale in the history of the world!

    BUY BUY BUY!

  10. Blueskylaw says:

    On Fridays close of $11.44, General Electric (GE) stock dividend is yielding 10.84%

    Unless you think GE is going to go bankrupt or cut their dividend, you might want to salt away a few shares. True it may go even lower but almost 11% on your money is nothing to complain about.

  11. Jrsy Devil's Food Cake says:

    How do you recover from being financially nuked back into the stone age…?

  12. tz says:

    If you had $39,000 in the Nikkei 225 (Japan) in 1980, it would be worth less than $8000 today. Does the calculator expect a Japan like result (since we are following them with zombie banks, etc.) so that in 20 years (2028) you would have half of what you had at the peak? When IS Japan going to come back? – it isn’t one of those IMF 3rd world places. I think it was also about 20 years from the 1929 peak until the Dow was at break-even.

    And when is my Enron and Worldcom stock going to be back to its value at their peaks? Linens N Things? Circuit City? Fannie and Freddie?

    And how much was Gold and Silver 20 years ago?

  13. oneliketadow says:

    What we really need is a calculator to figure out how many shotgun shells, ramen packs, and cans of gasoline to buy for the post-econopolyse period.

  14. Jeff says:

    They don’t ring a bell at the bottom to announce it’s time to jump in and buy stocks. Maximum profits come to those who invest at what the late John Templeton, one of the great investors, called periods of maximum pessimism. I’d take a guess he’d agree that early 2009 might qualify.
    I’m tip-toeing back in with some extra money. It’s scary, but they don’t put stocks of great companies on sale like this very often. Buy in small amounts and average in over the months to come. When it’s clear that the bottom was reached and the market rockets ahead, it will be too late. If it turns out to be too early, you can buy some of your stocks at even cheaper prices because you didn’t go in all at once.
    Don’t put it all in stocks. Spread your assets to other asset classes. My bonds are up 10% for the last year, offsetting some of the stock losses (in addition to not losing more, as they would have if the money was in stocks).
    Finally, good returns take some risk, but the dot come crash taught me to only invest what lets you sleep at night.

  15. econobiker says:

    Yeah, great, I put $500 in my child’s education IRA back in 2000 and 2001= $1000. Which equaled about $800 from 2002 through 2006. Now it is back down from $1100 in 2006 to the realistic $700 again.

    Yeah sure it works great. At this rate he will be able to buy a couple of college text books with that money. And I am sure they will still be selling text books too when he is ready to attend college in Fall of 2018.

    Sure the market always goes up over time…Azzholes…

    • redclear55 says:

      @econobiker: read this article to get a better grasp of “the market always goes up”

      [www1.blackrock.com]

      This calculator is deceiving as the focus is to show your break-even point. historical analysis of post-recession markets proves that returns are not linear. in 2009 we may very well see double digit returns on the upside mixed in with significant down markets. so in theory, you might break-even in 6 months before falling back down again.

      the point of the article above and investing in general is that its relatively safe if you are consistent and remain invested. be as diversified as possible (funds help here). do not attempt to time the market… no one can do this successfully.