Going back to 1974, the S&P 500 averages a pullback of 5% or more about three times a year. In other words, it's not uncommon to encounter a mild pullback every three to four months. Further, the average intra-year correction from top to bottom is roughly 14%.
Historically, September has earned the title of the worst-performing month for stocks. According to data from the S&P 500 and Dow Jones Industrial Average, September has frequently seen negative returns over the years.
You invest instead in a low-cost stock market index fund aiming for the market's historical average return of about 10%, you could double your money in just over seven years (72 ÷ 10 = 7.2). Keep in mind that, unlike a savings account, stock market returns aren't guaranteed and can vary significantly from year to year.
For the S&P 500 Index, over the last 80 years, there have been 24 corrections, which had average market declines of just over 14%. It usually takes around five months for a correction to reach its lowest point. Market crashes for the S&P 500, however, are even rarer, having happened only 13 times since 1950.
The bounce-back from the 2008 crash took five and a half years, but an additional half year to regain your purchasing power.
If you're taking a long-term perspective on the stock market and are properly diversifying your portfolio, it's almost always a good time to invest. That's because the market tends to go up over time, and time in the market is more important than timing the market, as the old saying goes.
The 7% rule is a straightforward guideline for cutting losses in stock trading. It suggests that investors should exit a position if the stock price falls 7% below the purchase price.
Meet your financial needs with the 60/30/10 budget
This approach allocates 60% of your income to needs, 30% to wants, and 10% to savings. Breaking down your income into these three categories gives you a simple and practical guideline for planning how you'll spend your money each month.
Try Flipping Things
Another way to double your $2,000 in 24 hours is by flipping items. This method involves buying items at a lower price and selling them for a profit. You can start by looking for items that are in high demand or have a high resale value. One popular option is to start a retail arbitrage business.
The 3 5 7 rule is a risk management strategy in trading that emphasizes limiting risk on each individual trade to 3% of the trading capital, keeping overall exposure to 5% across all trades, and ensuring that winning trades yield at least 7% more profit than losing trades.
The Best Day of the Week to Buy Stocks
Monday is probably the best day to trade stocks, since there is likely considerable volatility pent up over the weekend. That said, Friday can also be a good day to trade, as investors make moves to prepare their portfolios for a couple of days off.
Some consider the observed weakness in September to be attributable to seasonal behavioral bias as investors make portfolio changes to cash in at summer's end. While there may be some statistical evidence for the September Effect, this will depend on what time period you look at.
The slide continued through the summer of 1932, when the Dow closed at 41.22, its lowest value of the twentieth century, 89 percent below its peak. The Dow did not return to its pre-crash heights until November 1954. The financial boom occurred during an era of optimism. Families prospered.
Key Takeaways. While holding or moving to cash might feel good mentally and help avoid short-term stock market volatility, it is unlikely to be wise over the long term. Once you cash out a stock that's dropped in price, you move from a paper loss to an actual loss.
There have been 24 stock market corrections since World War II and the average correction sees the market drop by -14.3%, which can be painful. However, once the market starts to turn, it can recover quickly. The average recovery time for a correction is just four months!
What is the 15-15-15 rule in mutual funds? The rule says that an investor can create a corpus of around one crore rupees by investing Rs. 15,000 per month for 15 years in a mutual fund that can generate 15% average returns based on the power of compounding.
The 70:20:10 rule helps safeguard SIPs by allocating 70% to low-risk, 20% to medium-risk, and 10% to high-risk investments, ensuring stability, balanced growth, and high returns while managing market fluctuations.
Experts typically recommend setting aside around 20% of each paycheck for savings. However, the exact amount you save will vary based on your income, monthly expenses and personal goals. These strategies can help you prioritize your savings and determine how much to set aside from each paycheck.
2.1 First Golden Rule: 'Buy what's worth owning forever'
This rule tells you that when you are selecting which stock to buy, you should think as if you will co-own the company forever.
So just to quickly summarise:
If you're looking for the best time to either buy or sell a stock during the trading day it is; During the last 10-15 minutes before market close. Or about an hour after the market opens.
The U.S. stock market generally did well in 2024 and may continue strong in 2025. However, we expect to see gear shifts and increased market volatility as potential policies from the incoming Trump administration combine with uncertainty about inflation and global economic strength.
Best Months to Buy or Sell Stocks. Our analysis of S&P 500 data from 2000 to 2024 also revealed some clear monthly patterns. November is historically the strongest month, with an average daily return of 0.107% and positive returns 57% of the time. April and July are the next strongest months.