This is a question I hear a lot.
It's difficult to explain the most recent monthly return or year-to-date return and not talk about the long-term average return of the stock market. Many investors have a tough time hanging on during the difficult times to then subsequently reap the rewards during the good years. With all the ups and downs the market provides, it very rarely returns in any single year the long-term market average. Take a look below.
Part of the value of getting professional financial advice is understanding the history of the various investable markets and what you can expect both in terms of volatility and return. A good financial advisor will provide sound financial advice that will stand the test of time both in good times and bad times.
When the financial markets are in turmoil and account balances start to fall, there is a strong temptation to ask your financial advisor to “do something” to stem any perceived losses. Yet it is often the case that staying the course—or doing nothing—proves to be the better path.
Sometimes the hardest thing to do...is to do nothing.
While this advice is well served to those who are properly invested for the long-term, it may not be the correct advice if you are not invested properly or your time horizon doesn't allow for markets to recover. Proper planning is crucial to being able to stay the course when rough weather is approaching or is already hammering your ship. The best time to make any course corrections is long before any corrective action is forced upon you by the market.
Download the 1-page PDF below.
Paul R. Rossi, CFA