Consider your time horizon

Investors who worry that the stock market may take a dive and take their
money down with it need to consider the length of time that they plan to
invest. In a one-year period in the stock and bond markets, anything can
happen (as shown in Figure 2-1). History shows that you lose money about
once in every three years that you invest in the stock and bond markets.
However, stock market investors have made money (sometimes substantial
amounts) approximately two-thirds of the time over a one-year period. (Bond
investors made money about two-thirds of the time, too, although they made
a good deal less on average.)
Although the stock market is more volatile in the short term than the bond
market, stock market investors have earned far better long-term returns than
bond investors have. (See the “Stock returns” section later in this chapter
for more details.) Why? Because stock investors bear risks that bond investors don’t bear, and they can reasonably expect to be compensated for those
risks. Remember, however, that bonds generally outperform a boring old
bank account.
History has shown that the risk of a stock or bond market fall becomes less of
a concern the longer the period that you plan to invest. As Figure 2-2 shows,
as the holding period for owning stocks increases from 1 year to 3 years to
5 years to 10 years and then to 20 years, the likelihood of stocks increasing
in value increases. In fact, over any 20-year time span, the U.S. stock market,
as measured by the S&P 500 index of larger company stocks, has never lost
money, even after you subtract for the effects of inflation.