Expected SPY returns for investment periods of different duration

We are using the service to evaluate the annualized returns from holding the SPY ETF between 1993 and 2019 for all the periods of 1, 2, 3, 6, 9 and 12 years duration. We will be reviewing the low-end 10%, high-end 90% and the median performance (%50).

Below are the statistical results for 1 year investment.

Simulation of investing for 1 year

Read as follows: 6% return at 30% percentile means that in 70% of the experiments the returns were 6% annualy or higher.

As you can see, the 10% percentile is rather low (-16%) while the 90% is very high (28%): investing for a short period of time you are likely to make or loose much money, depending on the performance of the general market the same year.

In a year you will likely be making good profits (13% median). However, you cannot be quite confident you will get any returns at all and not be loosing signicant portion of the original investment (every fifth investment will be lossy).

We will now try increase the investment window duration and see the distribution of returns.

Simulation of investing for 9 years

As expected, holding SPY for longer periods of time you can be way more confident you are at least getting all your money back and the median returns should range somewhere between 6% and 8% annualy.

Simulation of investing for 3 years

Simulation of investing for 6 years

Simulation of investing for 12 years