Meet John Smith, the world's worst (or perhaps just unluckiest) investor. Don’t feel too bad for him, though—he’s fictional! His story shows us what not to do when investing.

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John's Plan

In 1971, at age 21, John began saving for retirement. His plan was to invest $500 a year, adjusted for inflation. He was careful but unfortunately, only confident enough to invest when the stock market was soaring.

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Bad Timing: 1973 Market Crash

John’s first investment was in 1972 when the market was doing well. But bad luck hit: the market entered one of its worst bear markets, and he lost nearly half of his investment. Despite his losses, he didn’t sell. He stashed away his portfolio and tried to forget about it.

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Black Monday: 1987 Crash

John avoided the market for over a decade. In the mid-1980s, the market had recovered, so John invested again in 1987—just before Black Monday, the biggest one-day market crash in history. John’s luck struck again, and he swore off investing.

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The Dot-com Bubble: 2000 Crash

By the late 1990s, the internet boom was impossible to ignore. John invested, excited by the potential of tech stocks. Unfortunately, the dot-com bubble burst, and the market plummeted, wiping out much of his gains.

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The Global Financial Crisis: 2007 Crash

In 2007, nearing retirement, John cautiously invested once more. But then, the Global Financial Crisis hit, causing markets to crash again. John couldn’t believe his bad fortune and avoided the market for years.

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The COVID-19 Crash

After a long break, John returned to investing in 2019. However, the COVID-19 pandemic struck shortly after, causing a sharp market drop. Luckily, this time the market rebounded quickly, and John didn’t lose much.

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Unlucky John’s mistimed share market investments...

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The Lessons

Despite his poor timing, John's savings over 50 years grew to just over $1 million, with an average return of 7.2% per year. Why? John followed a few key principles:

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⏰ Start Early and Stick With It‍

John began saving at a young age and kept saving, no matter what happened.

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⛔ Don’t Panic‍

He never sold, allowing his investments to recover over time.

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🚀 Long-term Investing

His long-term approach allowed him to benefit from the power of compounding.

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If John had invested consistently, rather than only when the market was high, his portfolio could have been worth over $2 million! The key takeaway: steady, consistent investing pays off in the long run, even through market ups and downs.

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Written by Forsyth Barr Research – The expertise behind Tempo 💪