Passive Investing: Luck or Patience?
Journal of Finance and Accountancy, 2020
14 Pages Posted: 9 Oct 2020
Date Written: 2020
Passive investing over relatively long time-periods is a strategy followed by many individuals. In this paper, empirical evidence is presented beginning January 1950 that demonstrates that the success of this strategy is dependent not only on the length of the investment horizon, but also by the date of the initial investment. 10, 20, and 30-year periods are examined for both a lump sum initial investment and then for a monthly annuity investment. Longer horizons are shown to decrease the chance of an overall loss on a portfolio. However, different initial investment dates result in a wide range of ending portfolio values.
Keywords: passive investing, S&P 500 index, investment horizon, annuity, lump sum
JEL Classification: G11
Suggested Citation: Suggested Citation