When it comes to investing, many people still imagine that it’s necessary to “beat the market,” guess the next hype, or enter and exit at exactly the right time. However, a cold analysis of data and history reveals a much simpler and more powerful truth: time trumps almost everything.
Charles D. Ellis, a pioneer in diversified index fund investing, distilled decades of experience and study into a book published in February by Wiley: Rethinking Investing: A Very Short Guide for Very Long-Term Investing.
According to Ellis, the secret to investing is time. “How much time is there between the moment you invest the money and the moment you stop spending it? For ‘long-term,’ most people think six months, maybe a year, maybe even a few years.”
And the numbers are on his side.
Exponential Growth: The Power of Compound Interest
According to data from S&P Dow Jones Indices, between January 1926 and March 2025, the S&P 500 — which includes the largest companies in the United States — had an annualized total return of 10.43% per year, with dividends reinvested.
Looking at the last 60 years, the return was even more impressive: 10.46% annually through June 2025. But what does that mean in practice?
In the table, you can see the growth of an initial $1,000 investment held over the decades with an average annual return of 10.46%.
| Period (Years) | Accumulated Value | Wealth Multiplication |
| 10 years | $2,702 | 2.7x |
| 20 years | $7,307 | 7.3x |
| 30 years | $19,762 | 19.7x |
| 40 years | $53,408 | 53.4x |
| 50 years | $144,343 | 144.3x |
| 60 years | $389,811 | 389.8x |
In other words, a 25-year-old who invested $1,000 today and left it untouched in an index fund until age 85 would see their money grow to nearly $390,000 — simply by reinvesting dividends and not panicking during crises.
Sixty years ago, stock index funds were not widely available. But Jack Bogle, founder of Vanguard, changed that in 1976, and index funds for stocks and bonds — as well as for cryptocurrencies and seemingly everything else that can be bought or sold in public markets — are now readily available to anyone with money to invest.
The Importance of Consistency and Patience
This strategy only works if the investor resists the temptation to withdraw money during market downturns. And yes, those do happen. In one-year periods, the S&P 500 has posted negative returns about 30% of the time. But over 15-year periods, the chance of loss drops drastically.
Morningstar Direct analyzed the data from 1926 to 2024 and showed that anyone who held the S&P 500 for at least 15 years never recorded a loss — a powerful statistic that should be on every beginner investor’s radar.
Stocks vs. Bonds: What’s the Ideal Balance?
While Mr. Ellis argues that all money intended for the long term should be in stocks, many analysts — including those at Morningstar — suggest that keeping part of the portfolio in investment-grade bonds (like Treasury bonds or fixed income funds) can reduce volatility and increase security.
Locking your money in a stock index fund and holding it there for at least six decades is a great idea, but it’s a luxury that many people can’t afford. That’s why I believe it makes sense for people to take care of their immediate and predictable needs first.
Paying your bills on time can be a challenge. If you can do that and have some savings, setting aside enough money for short-term needs and emergencies is a good idea.
Historical Risk Comparison (1926–2024)
| Portfolio Composition | 1-Year Period Loss Probability | 10-Year Period Loss Probability |
| 100% Stocks (S&P 500) | 30% | 5% |
| 60% Stocks / 40% Bonds | 18% | 0% |
This type of protection provides emotional security for many investors who might feel uneasy seeing large drops in their account statements during crises.
The Final Lesson: Time Is Your Greatest Ally
If there’s one certainty in the financial markets, it’s this: short-term predictions are impossible. But looking over the past decades, the message is clear — stocks win in the long run. Index funds offer simplicity, low cost, and market-matching returns.
So the question isn’t “Should I invest now?” but rather: “How many decades will I give my money to grow?”
Invest wisely, stay disciplined, and let time work for you. After all, as Ellis concludes, “It’s hard to believe without doing the math… but those who invest in the stock market with patience have already reaped — and will continue to reap — extraordinary results.”
