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Market Volatility
Keep a Long-Term Perspective
Not every financial account that goes down in value stays down. In fact, history shows that financial markets eventually recover with time.* Rather than making drastic moves at the first sign of trouble, here’s some practical wisdom designed to help you recover well in the wake of challenging downturns.
Stay invested for the long haul
The chart below shows several decades’ worth of stock and bond market performance. While markets saw some alarming dips, they also rallied periodically for strong gains and ultimately moved forward in an upward trajectory. We also see a potential benefit of diversification* at work. The green line, which represents a portfolio composed of both stocks and bonds, generated higher returns than an all-bond or all-cash portfolio with less volatility than an all-stock portfolio.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT OVER TIME
As of December 31, 2023
Sources: T. Rowe Price, created with Zephyr StyleADVISOR; S&P; Bloomberg Index Services Ltd.; and FTSE. See Additional Disclosures.
*Past performance cannot guarantee future results. It is not possible to invest directly in an index. Chart is shown for illustrative purposes only. Stocks: S&P 500 Index, Bonds: Bloomberg U.S. Aggregate Bond Index, and Cash: FTSE 3-Month U.S. Treasury Bill Index. As of December 31, 2023.
“Bloomberg®” and Bloomberg Indices are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the index (collectively, “Bloomberg”) and have been licensed for use for certain purposes by T. Rowe Price. Bloomberg is not affiliated with T. Rowe Price, and Bloomberg does not approve, endorse, review, or recommend this product. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to this product.
The stock market has delivered positive returns for every rolling 15-year period covered in our analysis.
A 60/40 asset allocation of stocks and bonds may allow investors to achieve greater levels of growth than an all-bond or all-cash portfolio, while reducing exposure to the volatility of an all-stock portfolio.
Important Information
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.
This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.
*Diversification cannot assure a profit or protect against loss in a declining market.
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