Time to Recover from a Bear Market Calculator
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Use this calculator to estimate the number of years it will take an investment to recover from a bear market.
Let’s say you have a $100,000 portfolio that goes down by 30% to a value of $70,000. How long will it take for your portfolio to get back to it’s original value of $100,000? If your portfolio earns a 10% annual rate of return, it will take 4 years, if you earn 8%, it will take 5 years and if you earn 6% per year, it will take 7 years.
What History Tells Us
Historically, markets have rebounded strongly after each bear market. Since 1968, Canadian stock market returns (S&P/TSX Total Return Index) have increased by an average of 34% during the first twelve months following the end of a bear market. During this same period, it took an average of 22 months for the market to recover to it’s peak level recorded at the start of the bear market.
Although there is no guarantee that history will repeat itself, the odds are in your favour that you will recover from a bear market if you have a long-term investment horizon. However, if you need all of your money within a few years, there might not be enough time to recover.