Investing 101: Stocks go up, stocks go down, but they average 10% a year - USATODAY.com - 0 views
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It's important to remember that this doesn't mean the stock market returns exactly 10% a year, every year. It's actually unusual for the market to return exactly 10% in a given year. The S&P 500 has only posted a return of between 10.0% and 10.9% four times since 1926 and only returned exactly 10% once, in 1966, according to S&P data that includes dividends.
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Stock returns are wild and unpredictable. Since 1927, the S&P 500 stock index has gained 10.4% a year on average. But in any given year it could be up 29.9% or down 9.0% or somewhere in between, says IFA.com.
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To do that, it's important to understand the power of diversification and the benefits of owning many types of stocks, from large value-priced stocks to small value-priced stocks. Diversification lets you minimize the risk posed by a single stock or type of stock and lets you still get your share of the market's return.
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You must also understand that to claim your 10% return, you need to be invested for a number of years and ignore short-term stock movements.