In investing, timing is everything [INFOGRAPHIC]

via FlowingData by Nathan Yau on 1/13/11


When you invest in stocks, it’s not just what you invest in, but also when you put the money in and when you get it out. The New York Times explains with this grid diagram:

This chart at right shows annualized returns for the S.& P. 500 for every starting year and every ending year since 1920 — nearly 4,000 combinations in all. Read across the chart to see how money invested in a given year performed, depending on when it was withdrawn.

Darker red represents greater loss while darker green represents the greater gains. Tan color indicates more modest gains.

The method probably isn’t new, but it’s the first time I’ve seen it. I like it. I’ve only seen those “what if” calculators where you enter a value to see how it would’ve paid off. That only lets you see one scenario at a time. This type of chart lets you see multiple time spans at once.

[New York Times]


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