Monday, June 27, 2016

Explain This Chart To Teens Before Bothering With Brexit

Today’s fantastic family finance article is:

Disappearing Stock Dip

“Dad, what’s Brexit?”

This week, the kids are probably overhearing lots of adult banter about Brexit. They may not know what the UK’s exit from the European Union is all about, but they’re getting the general idea that, whatever it is, it’s causing a lot of parents to panic about their stock portfolios.

Except you.

Why? You’re armed with a broadly diversified portfolio, a long term view, and the perspective inducing chart in today’s article courtesy of The Motley Fool.

It shows a 140 year stretch of the US stock market adjusted for dividends and inflation. As you can see, if you zoom far enough out on a broad collection of stocks like the S&P 500, it’s all up and to the right.

That’s the key. Zoom out far enough. Think decades not days. All the dips disappear eventually. That includes the Great Depression, the DotCom Crash, the Great Recession, and before you know it, Brexit.

So explain index funds, dollar cost averaging, and this chart to your teens before you bother with Brexit.

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