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Actually, had the 40 year old in my example been investing new money in the 20 years after any major stock market crash, he would have done quite well.

AH, but if he had been investing 50/50 from 1920 up to 1929, and then hit 1929, and rebalanced his portfolio to 50/50 in 1930, he would be way ahead of someone who had just bought stock along the way.....

IT took until 1954 to recover from the 'bubble of 1929'.......Meanwhile, bonds were chugging along fine, and if you had rebalanced in 1929, you would have made a killing over the next 30 years.

Now what if this person had started in 1920 saving, and then had to retire in 1939 with all stock? too bad....out of money real quick.....if he had put 30-40% in bonds along the way, and rebalanced each year as stocks climbed, come 1930, he would have been VERY happy, and very happy for the next 30 years in retirement after 1940.....

you have no idea if the next ten plus years will resemble 1930-1940, 1937 to 1957 (not good), or even worse 1966-1988......

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