Investment books mention the word "risk" a lot, but they seem to quickly introduce terms like beta and get rather wordy. While doing some other research I found that the Yahoo Finance section had information about a stocks best and worst years. I think the table below shows risk with nice simple numbers. How "risky" are stocks verses bonds? Check below.
Are you going to sell your stocks if the market drops 33% in one year? If yes, you should NOT have 100% of your portfolio in stocks. It has done this before, and will likely do so again.
How long is a long "downturn"? About 3 years it seems. Can your retirement account survive a 3 year period of time where it is still at -9%? If that is a problem, you should not be 100% in stocks.
|VTSMX||Vanguard Total Stock Market Index Fund Investor Shares (US)||-37%||-9%||1992|
|VGTSX||Vanguard Total International Stock Index Fund Investor Shares||-44%||-7%||1996|
|VBMFX||Vanguard Total Bond Market Index Fund Investor Shares (US)||-3%||+1%||1986|