Weathering uncertain markets

Sep 29, 2016
By BlackRock

Key Points

  • Stay invested through difficult times and periods of uneven growth. Missing just a few top-performing days can hurt your returns.
  • The prevailing environment requires you to consider a broader range of investment opportunities—ones that can offer growth potential and downside protection.
  • If you stepped to the sidelines and built up cash after the 2008 crisis, it may be time to reassess where you are and explore the possibilities for making that cash work harder for you.

 


Building confidence...and wealth

Market gyrations can test not only your investment portfolio, but your internal fortitude. It's hard to be confident in your strategy when volatility means it might see ups and downs. And the years since the 2008 market meltdown certainly have presented a test. Financial and geopolitical crises, slow economic growth and unprecedented levels of central bank intervention have led to increased uncertainty.

Today, rates are still low, economic growth is slow, and central banks are nearing the limits on what monetary policy can achieve. Going forward, returns on most assets are likely to be lower than in the recent past. And interest rates, despite Fed hikes, are likely to remain low for longer.

The prevailing environment requires you to consider a broader range of investment opportunities — ones that can offer growth potential and downside protection. And to achieve your goals, you need to stick with your chosen strategies long enough to see the benefits — even through the inevitable market fluctuations. Assess your readiness to venture forward by asking yourself these key questions:

  • Do your emotions lead you astray?

    Have your emotions caused you to buy high, sell low?
    Growth of a hypothetical $100,000 investment in the S&P 500 Index over the past 20 years, 1996–2015

    Do your emotions lead you astray?

  • Has fear driven you to cash?

    Cash has averaged a negative return after inflation and taxes
    Compound annual returns, 1926–2015

    Has fear driven you to cash?

  • Or led you to time the market?

    Missing top-performing days can hurt your return
    Hypothetical investment of $100,000 in the S&P 500 Index over the past 20 years, 1996–2015

    Or led you to time the market?

  • Do you maintain a long-term perspective?

    The average investor underperforms
    20-year annualized returns by asset class, 1996–2015

    Do you maintain a long-term perspective?

Take a deeper look as we help you answer these important questions and take action aimed at building and preserving your wealth.

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