Creating a Financial Plan
The market can change quickly and throw investors off balance. Declines are especially disturbing for those who are concerned with short-term fluctuations and watch the daily returns during volatile periods. During such periods, it can be helpful to step back and perhaps adjust your perspective.
For example, a look at the stock market over the past 30 years through December 31, 2016, shows quarterly gains — and losses — of as much as 23%. However, a hypothetical investor who entered the market with $1,000 and stayed the course would have seen an average annual return of 10.16%, and an ending value of $18,226.
Focusing on short-term results could make many investors nervous:
Quarterly Returns of the S&P 500 (1987-2016)
A long-term perspective shows how an investment would have grown over that same period:
Growth of a $1,000 Investment in S&P 500 (1987-2016)
Looking at short-term results can be uncomfortable and frustrating, with the constant ups and downs. Focusing on long-term results can make those relatively brief jolts more tolerable. It may be easier to stay the course if you maintain a long-term perspective.
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Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Certain market indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.