“History never repeats itself, but it rhymes” – Mark Twain
At Fair Share Partners we believe the following six factors are crucial to accumulating wealth:
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- Savings – the higher the better
- Time – the longer the better
- Growth – the higher the better
- Costs – the lower the better
- Risk – the lower the better
- Luck – the luckier the better
Over the course of your lifetime, the combined impact of these six factors (additional information on the six factors is available here) can have a marvellous or devastating impact on your accumulated wealth. Table 1 below draws on over 100 years of stock market data and it provides an indication of the range of outcomes that would have been achieved using the Buy & Hold investment approach depending on the particular combination of the above six factors.
Table 1: The Combined Impact of the Six Factors on Wealth Accumulation
| Monthly Savings | Time (Years) | Total Invested | Annual Costs | Historical Outcomes | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|---|---|---|---|
| Buy | & | Hold | |||||||
| €500 | 45 | €270,000 | 0.5% | Value in Year 45 | €708,000 | €1,113,000 | €1,416,000 | €1,933,000 | €3,456,000 |
| €100 | 25 | €30,000 | 1.0% | Value in Year 25 | €26,000 | €51,000 | €65,000 | €89,000 | €163,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
We believe that by taking a peek at the past we can get a feel for the future. We are confident that the future will indeed rhyme with history and therefore the Buy & Hold investment approach should deliver future outcomes that are comparable to the historical outcomes displayed in the table above.