The Power of Staying Invested
When markets feel uncertain, it’s natural to think about pulling back your investments or moving them to “safer” options. But history shows that staying invested is one of the most powerful strategies you can use to build long-term wealth.
Bear vs Bull Markets – What Do They Mean?
A bear market is when share prices fall by 20% or more from recent highs, usually caused by economic downturns, rising interest rates, or global events. It’s called a “bear” market because bears swipe their paws downwards – just like the market’s trend during these periods.
A bull market, on the other hand, is when share prices rise by 20% or more after a decline, driven by investor confidence and economic growth. Bulls thrust their horns upwards, just like the market climbs during these times.
Markets Recover – Every Time
It can be confronting to see your portfolio’s value drop during a bear market. However, history tells us that markets have always recovered, often with their strongest rallies (recoveries) occurring within the first 6 months after they hit their lowest point.
For example, after significant market declines, such as the Global Financial Crisis in 2008 or the COVID-19 crash in 2020, markets bounced back sharply. Investors who stayed invested and didn’t try to time the market benefited most from these rapid recoveries.
Why Staying Invested Matters
If you pull out of the market during a downturn, you risk missing these strong recovery periods – meaning your portfolio might not recover as quickly or grow as much as it could have. By staying invested, you:
Avoid trying to time unpredictable market movements
Give your investments time to grow and compound
Stay aligned with your long-term financial goals
The Bottom Line
While market volatility can feel stressful, remember – bear markets are temporary, but missing out on market rallies can have a permanent impact on your wealth. Staying invested through ups and downs has proven to be one of the most reliable strategies for building your financial future.
If you’re feeling uneasy about market movements, speak with your financial planner to ensure your investments remain aligned with your goals and risk comfort, while keeping you on track for the life you’re working hard to build.