Advisor Website Home | Contact Us | Site Map | Help | Career Opportunities

Four principles for investment success

These fundamental principles can help you chart a course through today's investment environment.

  1. Stay true to your objectives

    If you’re like most investors today, you’re concerned about market volatility. And that means you’re probably paying close attention to the daily stream of news tracking the market’s ups and downs.

    Problem: Where you focus your attention can influence the way you perceive your own progress.

    Solution: Look past the inevitable market swings and steady drumbeat of news. If you stay focused on your own financial objectives, you’re more likely to stay on track and attain success.

    To get a sense of how powerful context can be, take a look at the illustrations below.

    The same 20-year period from 3 distinct perspectives

    The media

    View larger image

    Focusing on short-term fluctuations can make investing confusing and uncomfortable.

    The markets

    View larger image

    Even a year-by-year look at returns can emphasize how much an investment lost during declines instead of how much it grew over time.

    Your objectives

    View larger image

    Focusing on long-term goals can help you avoid being sidetracked or distracted by ever-changing market conditions.

  2. Be a realist

    While periods of economic and market strength often inspire investor optimism, market turmoil can lead to intense investor pessimism.

    Problem: Your emotions can lead to poor investment decisions, such as buying stocks at or near market highs and selling near market lows.

    Solution: Rather than soar in the heights and dwell in the depths, take a realistic approach to investing that includes maintaining a well-diversified portfolio.

    This chart shows how money has flowed into and out of the market as it has risen and faltered.

    Why a 116% advance didn’t feel so good

    View larger image
  3. Don’t confuse safety for security

    The market volatility and economic uncertainty of the past four years severely undermined investor confidence. As a result, you may have given up on equity investing, instead seeking out the safety of cash.

    Problem: If you’re in or near retirement and are starting to rely on your investments for income, having all of your assets in cash could leave you more vulnerable to the potentially damaging effects of inflation.

    Solution: Although past results are not predictive of future results, stocks and bonds have generated relatively attractive returns that have outpaced inflation. Of course, stocks and bonds have also been more vulnerable than cash, so including cash investments in your portfolio can add a measure of stability.

    In the following illustrations, you can see how important stocks and bonds are to a well-diversified portfolio.

    Why stocks and bonds matter long-term

    View larger image

    The impact to investors taking income

    View larger image
  4. Plan for the ups and downs

    Market cycles inevitably include periods of strength and weakness.

    Problem: The precise duration and scope of bull and bear markets are never clear until after the fact. So trying to time these cycles consistently is nearly impossible.

    Solution: Sticking with a well-constructed investment plan is a key to long-term success. An objective-based approach to investing mirrors the way you manage your other personal finances. It divides your assets based on your needs and goals.

    • First, there’s the money you need to cover everyday and emergency expenses (preservation).
    • Then, there’s the money you set aside for the future (balance).
    • The rest goes toward helping you build assets to fulfill your long-term goals (appreciation).

    The result is an investment portfolio that is aligned with your short-term needs and long-term goals. A portfolio that can give you the confidence you need to stay with your plan when markets go to extremes.

    Money for everyday and emergency expenses

    Preservation

    Help protect assets during declines

    Like other investments, Preservation investments can lose value.

    Money for the future

    Balance

    Help build assets over time

    Money for longer term goals

    Appreciation

    Help shape the future

Stay focused on your objectives

Throughout history and across market cycles, investors have always faced uncertainty, discouraging headlines and bouts of high volatility. But over time, patient investors have been rewarded.

Following these four timeless principles of investing and working with your financial adviser to create and maintain a well-diversified portfolio can help you achieve your long-term goals.

Note: It’s important to work with your financial adviser when making changes to your financial plan.


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.