From The Measure of Plan, comes this wonderful animation showing the volatility of returns over time.
In the animation below of U.S. stock market returns show both positive (green) and negative (red) returns over time over 1, 5, 10 and 20 year rolling periods:
“To summarize: while the range of returns across 1-year periods have varied from negative 37.0% to +53.2%, the annualized returns across 20 year periods have a much tighter range from +0.5% to +13.2%.”
The demonstration of the significance of time may be obvious, but it is also very powerful: Over longer periods, markets tend to have far fewer negative periods than over shorter periods.
Source: The Measure of Plan