Will Your Money Grow Faster Next Year? A Look at What History Suggests

The Big Picture: What’s Happening with the Market

Imagine your favorite video game. Sometimes, there are special events or updates that make the game economy really exciting, with lots of new items and opportunities. Other times, things might feel a bit slower, or even a little risky. The stock market, which is where people buy and sell tiny pieces of big companies, can feel a bit like that sometimes.

The news we’re looking at is about how the stock market has performed in the past, especially during certain years of a president’s time in office. Specifically, it points out a pattern that has happened for the last 75 years: the stock market, represented by big indexes like the S&P 500, has tended to do really well in the sixth year of a president who serves two full terms.

Think of it like this: Imagine a school year. The first year might be about getting used to things. The middle years are when students are really hitting their stride, learning a lot and doing well. The sixth year of a presidency is a bit like the end of a school year where things are wrapping up, and historically, it’s been a surprisingly good time for the stock market.

During Donald Trump’s first term, for example, the stock market saw some big jumps. And the news suggests that the first year of his potential second term also saw strong growth. Now, the question is whether this historical trend will continue into the sixth year.

Why Does This Matter to You?

Even if you don’t have a lot of money right now, understanding how the market works is like learning the rules of a game that could be really important later in your life.

This historical trend suggests that the stock market might continue to grow. If that happens, it means that if you or your family invest money, that money could grow too. This is important because:

• Saving for the Future: If you’re saving for something big, like college or a car, a growing market means your savings could potentially increase faster.
• Understanding Investments: It helps you understand why people invest and what factors might influence their decisions. When you hear about the stock market going up or down, you’ll have a better idea of why it might be happening.
• Making Informed Choices Later: As you get older and start earning your own money, you’ll be able to make smarter choices about how to save and invest it. Knowing about these historical patterns can give you an edge.

However, the news also throws in some important warnings. Just because something happened in the past doesn’t mean it will happen again. There are always things that can make the market go down, like:

• Things Being Too Expensive: If something becomes really popular and everyone wants it, its price can go up a lot. If the stock market gets too “expensive” based on how much companies are actually earning, it might be more likely to fall. Think of it like a popular video game accessory that suddenly costs way more than it’s worth – people might stop buying it.
• New Technologies Not Working Out as Planned: Sometimes, new technologies are hyped up, but they don’t become as useful or popular as people expected. If this happens with things like Artificial Intelligence (AI), it could cause problems for the stock market.
• Trade Policies: Sometimes, rules about buying and selling goods between countries can affect how well businesses do. If these rules change in a way that hurts businesses, it can also affect the stock market.

So, while there’s a hopeful historical pattern, there are also real risks that could make the market go down. It’s like looking at a weather forecast that predicts sunshine but also mentions the possibility of a storm.

What Can You Do Now?

Even at 17, you can start building good money habits and understanding.

Actionable Step: Start by learning more about how companies make money. Pick one big company you know (like Apple, Google, or a company that makes your favorite snacks) and try to understand what they do and how they earn money. You can often find simple explanations on their websites or by searching for “how [company name] makes money” online. This will help you understand the basics of what makes a company valuable, which is the foundation of the stock market.

Disclaimer: This is for educational purposes only and not financial advice.