Fear of Investing

I was talking with someone about a month ago about his financial situation. Just to paint a picture: he is married, does not own a home, is debt free, and him and his wife are in a situation where they are not incurring a lot of expenses. He makes a regular income; She does not. His regular income covers all expenses that they have. His wife has irregular income coming in due to things on the side she does. All money she brings in goes to savings.

He wants to invest the extra money they have coming in but says he is scared to do so. My advice to him is what I have heard from many financial guru's in the past. Knowledge Eliminates Fear.

Know this:

97% of the 5-year periods in the entire market history made money
100% of the 10-year periods in the entire market history made money

Just pick any random 5 or 10 year period in the market's history and you will find these statistics are true. By the way, this includes during September 11 and the Great Depression.

Your money will go up if you just leave it. Here is some knowledge to steer you away from short term investing.

Only 66% of the 3-year periods in the entire market history made money

That is a 1 in 3 chance that I will LOSE some of my money. I am not taking those chances; I would much rather stick with the 97% and 100% figures.