MAINTAIN DISCIPLINE
TO STAY FOCUSED ON THE LONG TERM
Once your investment strategy is established, you need the discipline to
stick with it.
Responding to short-term market events by making dramatic changes to
your portfolio makes it difficult to stay on course toward your investment
goals. The table below shows just how costly it can be to become
distracted by short-term market ups and downs.
Why it’s better to stay invested
MISSING JUST THE 10 BEST DAYS IN A
10-YEAR PERIOD WOULD HAVE CUT THE AVERAGE ANNUAL RETURN OF AN INVESTMENT IN THE S&P/TSX IN HALF.
Based on returns of the S&P/TSX Composite Total Return Index for 10 years ended December 31, 2007.
No one can precisely forecast market tops or bottoms, and trying to do so
is extremely risky for two key reasons. First, responding to a market
decline by selling an investment guarantees a loss that only existed on
paper. Second, short-term thinking can prevent you from participating in
any gains whenever the market bounces back. And, as the chart below
shows, major declines have generally been followed by major recoveries.
Opportunities often follow market downturns
WHILE MANY INVESTORS WANT TO TAKE ACTION DURING A MARKET DOWNTURN, HISTORY SHOWS US THAT THE DISCIPLINED, PATIENT INVESTOR WILL OFTEN BE REWARDED AS MARKETS RETURN TO THEIR UPWARD PATH.
Based on returns of the S&P/TSX Composite Total Return Index.
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