It's Just Math...

Let’s say Samantha invests $100,000 in the stock market and in a gigantic downturn, she loses half. Not great for Samantha, since she was planning on sending her son to college soon and now she has $50,000. Perhaps it’s time to pick a new school, but first let’s do the math. 

Quick question:  How much does she need to gain to get back to even? 

Did you guess 50%? 

Wrong! When you lose 50% and you then gain 50%, you end up at 75%. If Samantha gained 50% after her bad run of luck, she’d be up to $75,000 … not the 100-grand she invested from the get-go. 

To get back to where she started and get her son packed off to college, Samantha’s going to need a whopping 100% return! So remember, the greater the losses … the greater the needed rebound just to get back to even. 

                   If you lose …        You’ll break even with …

                   10%                      11%

                   20%                      25%  

                   50%                      100%

                   80%                      400%