Market volatility is a constant. Help your clients understand the market’s history of long-term growth and the advantages of staying invested.
Stay invested to take advantage of the stock market’s growth potential.
Although the stock market has experienced several major downturns since 2000, history shows that stock markets eventually recover—though past performance cannot guarantee future results. The chart below demonstrates how the market has fluctuated over past decades. While stocks saw some drastic dips, they also rallied periodically for strong gains.
Over a long-term time horizon, stocks provide a higher return potential when compared with bonds or cash. The purple line represents a 60/40 allocation of stocks and bonds, which has generated significantly higher returns than an all-bond portfolio with less volatility than an all-stock portfolio.
Growth of $10,000
As of December 31, 2021
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, 2021.
“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.
Stay Invested for the Long Haul
While market downturns can lead to short-term losses, the picture changes with a long-term perspective. As the chart below shows, holding stocks for longer periods can reduce volatility over longer holding periods. The stock market has delivered positive returns for every rolling 15-year period covered in our analysis.
Look at the Market through a 15-Year Lens
S&P 500 Index
As of December 2021
Sources: T. Rowe Price, created with Zephyr StyleADVISOR, and S&P. See Additional Disclosures below. Price return calculations include dividends and capital gains. Annual returns beginning in calendar year 1970. Rolling 15-year data beginning in 1970. Past performance cannot guarantee future results. It is not possible to invest directly in an index. Chart is for illustrative purposes only.
Help mitigate portfolio volatility by holding stocks for the long term.
Bottom line: Remaining invested through downturns and corrections may allow you to take advantage of long-term growth potential.
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