Distribution of Investment Returns

December 3rd, 2013, by Phil Bennett

It is often suggested that investments into equities should be held for the medium to long term, or for at least five years. In this study we have looked at the range of returns generated by equity investments over 75 rolling 5 year periods (ending each calendar quarter) from 1990 to late 2013.

Whilst past performance is not a means of predicting the future, the distribution of 5 year returns over a reasonably long timescale provides a useful illustration of the range of gains and losses achieved during bear and bull markets and during periods of growth and recession. The timescale includes periods of major stock market volatility including the technology bubble of 1999/2000 and the global financial crisis of 2008/2009.

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