Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Please log in or sign up for a free account to continue.
Real Estate News & Current Events
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 5 years ago on .

User Stats

3,506
Posts
3,252
Votes
John Teachout
  • Rental Property Investor
  • Concord, GA
3,252
Votes |
3,506
Posts

How market volatility actually affects a portfolio

John Teachout
  • Rental Property Investor
  • Concord, GA
Posted

I'm sure most on here know this but there are some that don't realize what these wildly fluctuating swings in the market are actually doing to the value of their stocks.

In our hypothetical example we'll use a market fluctuation of an S&P 500 ETF indexed fund of 50% down, 50% up, 50% down, 50% up, 50% down, 50% up. Some people would look at that and think, oh, we're right back where we started, what a relief.

Here's what actually happened to your $100,000 fund. 50% down = $50,000. 50% up = $75,000. 50% down = $37,500. 50% up = $56,250. 50% down = $28,125 and 50% up = $42,188.

So your $100,000 has now become $42,188 and not exactly "right back where you started". The more fluctuations there are, the more diminished this becomes and at this point in the example, even 100% increase which would double the remaining amount leaves you short of the starting point. It will take a long period of growth to "get back" what has dissipated.