The article was first posted on March 1, 2001.
Few people are worried about volatility on the way up, but many get dispeptic on the way down.
For buy and hold investors, the longer the money remains invested, the less effect volatility has on the ending portfolio balance. You can run some of these scenarios yourself on the Retire Early Safe Contribution Calculator, click here . For example, there were 100 overlapping 30-Year holding periods between 1871 and 2000. Table 2. summarizes the results for these comparisons. Once you reach a 30-Year holding period, there is almost no chance the terminal value of the portfolio will be improved by maintaining an allocation to cash.