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Right there is the fly in the ointment.

I don't have a time machine, so I can't go back to 1985 and invest money. As you have noticed, investor #2 would not have put very much money in the stock market since 1985.

What did he do with it? Did he get a better return stuffing it in his matress than investing it in the market we had for the past 20 years? I doubt it.


But notice that investor #2 didn't need to put very much in the market. The extra money could have been invested in T-bills or something, so Investor #2 would have ended up with $90,000 compared to Investor #1 with $75,000. And have money in the bank waiting for the next buying opportunity.

Change it from $100 a month to $500 a month, and we're talking about $450,000 vs. $375,000 over the 25 years.


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