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From Cash to Growth: Understanding the stock market from a different angle.


As we navigate through uncertain times, it's understandable to have questions about investing. How often is the stock market positive? What happens if you insist on keeping your savings in cash? And with everything going on globally, is now a good time to invest? These are all valid concerns that many investors are facing today. In this blog post, we'll explore these questions and provide you with some insights that will help you make informed investment decisions.

How often is the stock market positive?

Looking at the past, we see that the stock market has tended to go up more often than it goes down. In fact, if we look at data going back to 1926, the stock market has had positive annual returns about 75.7% of the time. While it can be scary when the stock market goes through ups and downs, the good news is that history suggests that we are more likely to see our investments grow over time than to lose money. In fact, the longer we hold onto our investments, the better our chances of success. The graph below shows how often the stock market has gone up over any given period from 1 month to 20 years.

Source: YCharts

What happens if you insist on keeping your savings in cash?

If you had kept your money in cash from 1900 to 2020, the value of your money would have significantly decreased due to inflation. In fact, according to the Bank of Canada's inflation calculator, the cumulative rate of inflation in Canada during this period was approximately 2,665%, which means that something that cost $1 in 1900 would cost about $26.65 in 2020 Canadian dollars due to the effects of inflation over time.

This is a hefty price to pay if you want to keep up with your lifestyle needs over the long term. However, the good news is that the stock market can be a powerful tool to help you outpace inflation and grow your wealth over time.

Source: Wealth of Common Sense

With everything going on globally, is now a good time to invest?

It's understandable to feel uneasy about investing your hard-earned money in today's world of rising global tensions. When you've worked hard to build up your savings, it can be nerve-wracking to trust the financial system to do its job and help grow your wealth over time.

However, it's important to remember that the global financial system is resilient and has a long track record of weathering political and economic storms. For example, if we look at the MSCI All Country World Index - a broad global equity index that represents large and mid-cap equity performance across all 23 developed markets countries - we can see that despite various global events, the index has generated long-term positive returns.

While it's true that geopolitical risks can create short-term market volatility, it's important to maintain a long-term perspective when it comes to investing.

Source: Compounding Quality


In conclusion, the stock market has historically been positive more often than not, and keeping your savings in cash can lead to a significant loss in purchasing power due to inflation. While it's important to consider global events when making investment decisions, it's equally important to maintain a long-term perspective and focus on your investment goals. By working with a financial advisor and creating a diversified portfolio that includes a mix of stocks, bonds, and other assets, you can position yourself for success regardless of what's happening in the world. Remember, investing is a journey, not a destination, and with the right guidance and strategies, you can achieve your financial goals and create the life you desire.

- Kondwelani Kalinda, Licensed Assistant

Kondwelani Kalinda is a Licensed Assistant at Endeavour Wealth Management with iA Private Wealth, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Kondwelani Kalinda who is a Licensed Assistant for iA Private Wealth and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.


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