3 timelines to expect
1.Days to months: Noise, not returns
Stock prices jump down daily. you might be up 10% this month, down 15% next month. that’s normal volatility, not your real return. if you need money in <3 years, don’t use stocks.
2. 3-5 years: Maybe, return, maybe not
Over 3-5 years, markets are still risky. about 30% of the time you’d end up with less money than you started. this is why 5 years is minimum most advisors suggest.
3. 10+ years: History says yes
This is where stock shine. looking at long data:
- CSE All Share Index: ~12% average return per year over long periods, but with higher ups and downs.
rule: If you are stay invested 10-20 years with out panic selling, the chance of losing money drops close to 0. the chance of beating bank FDs or inflation goes way up.
The 3 things that change your timeline
- Time in market > timing in the market: 10k LKR invested at age 25 can be at 20k invested at age 35. just because of compounding time.
- Consistency: 5k LKR every month for 15 years will gives you way more than 9L LKR all at once then stopping.
- Patience: markets crash 20-30% every few years. returns show up after you survive those drops without selling.
