Invest for the long-term
You may have been discouraged to invest for the long-term given the events that transpired in the past decade. The dot.com and 9/11 crisis during 2000 to 2003 and the financial crisis between 2008 to 2010 has been challenging times for most investors.
However, this difficult decade should be viewed in the context of the long-term history of the equities market - poor periods of performance have always been accompanied by recoveries. It is also worth nothing that while markets may take a while to fully recover, around half of the losses are usually recovered in relatively short periods.
However, this difficult decade should be viewed in the context of the long-term history of the equities market - poor periods of performance have always been accompanied by recoveries. It is also worth nothing that while markets may take a while to fully recover, around half of the losses are usually recovered in relatively short periods.
Long-term history of equities market
Source: MSCI and Fidelity. Month end index levels of the MSCI World Index (Gross) in USD terms from 31 Dec 1969 to 31 Dec 2010.
No doubt, equities can be volatile and unpredictable investments. However, empirical evidence shows that investing for the long-term reduces the severity and odds of negative returns.
Annualised returns based on the MSCI World Index (Gross) in USD terms from 31 Dec 1969 to 31 Dec 2010.
Coping with volatility
During downturns, it could be tempting to move your investments to less risky asset classes. However, it is best to stay focused on your long-term investment plan as markets go through boom-bust cycles.
Diversify, diversify, diversify
Having a diversified pool of assets can help you protect your portfolio from excessive valuation swings and provides you with more consistent returns over time.