The Benefits of Long-Term Investing. Time In the Market vs. Timing the Market

Transcription

1 The Benefits of Long-Term Investing Time In the Market vs. Timing the Market

2 While you re sitting on the sidelines, waiting for just the right time to invest, some of the market s best single-day performances could slip right by you. The Cost of Waiting Some investors try to time the market, attempting to buy when it appears that the market is rising and sell when it appears that the market is falling. Unfortunately, it is nearly impossible to do this successfully and missing days in the market can devastate a portfolio over the long run. Here s what would have happened to investment returns for investors who missed the best of the market s trading days over the past 10 years. Average Annual Returns of the S&P 500 Index (January 1, 1997 December 31, 2006) Fully Invested Returns after being out of the market, as measured by the S&P 500 Index, for the specified number of the best-performing days: +8.33% 10 Days 20 Days 30 Days 40 Days 60 Days +3.32% Overall Average Return -0.46% -3.71% -6.42% Historically, most of the biggest gains occurred during very brief periods that are impossible to predict. That s why it s important to stay invested % Source: FT Interactive Data via FactSet Research Systems Inc Past performance is no guarantee of future results. Chart is for illustrative purposes only and is not representative of the future performance of any particular portfolio or security. The S&P 500 Index is an unmanaged index that tracks the performance of 500 stocks representing a sampling of the largest foreign and domestic stocks traded publicly in the United States. Because it is market weighted, the index will reflect changes in larger company stocks more heavily than those in smaller company stocks. Investors cannot invest directly in an index. Results shown reflect the reinvestment of dividends.

3 The Long T Ask yourself the following questions: Do you believe in the long-term growth potential of the market? Ask yourself the following questions: Do you believe in the long-term growth potential of the market? Do you want to participate? Can you afford to wait and miss out? Do you want to participate? Can you afford to wait and miss out?

4 Markets experience ups and downs In the short term, stock markets can swing dramatically. However, investors who have historically stayed the course with a long-term investment plan have been rewarded. Consider the percentage of time that the S&P 500 Index has provided positive results. Longer Holding Periods Have Historically Rewarded Investors Rolling Calendar Periods of the S&P 500 Index ( ) % of Holdings Periods In Which The Unmanaged S&P 500 Index Provided Positive Returns 100% 97% As holding periods increase, the probability of positive returns has historically increased. For example, 72% of the one-year holding periods of the S&P 500 Index from has provided positive returns, whereas 100% of the 20-year holding periods have produced positive returns. 72% 87% 1-Year 5-Year 10-Year 20-Year Holding Periods Source: Ibbotson Associates (2007 Yearbook) Past performance is no guarantee of future results. Chart is for illustrative purposes only and is not representative of the future performance of any particular portfolio or security. The S&P 500 Index is an unmanaged index that tracks the performance of 500 stocks representing a sampling of the largest foreign and domestic stocks traded publicly in the United States. Because it is market weighted, the index will reflect changes in larger company stocks more heavily than those in smaller company stocks. Investors cannot invest directly in an index. Results shown reflect the reinvestment of dividends. erm Provides Stab

5 If there is one thing we have learned over the years, it is that times change. And yet, the lessons remain largely the same. Don t Panic Investors are often faced with three options: sell, hold, or hold and buy more. A sell strategy is one in which the investor sells what he or she owns, realizing any gains (or losses). A traditional hold strategy is one in which the investor holds investments for the long run. With a hold and buy more strategy, an investor can add to a position in down periods and likely benefit in a future recovery. How these strategies compare in historical bear markets as defined by the S&P 500 Historical Market Crisis Sell Hold Hold & Buy More 1 Sold at bottom Did nothing Added investment of equal amount Recovery From Market Bottom One Year Later Recovered in Recovered in The Great Depression ( ) Lost 78% 48 Months 3 Months +137% World War II ( ) Lost 31% 9 Months 4 Months +64% Oil Crisis ( ) Lost 44% 20 Months 5 Months +44% Crash of 1987 (Sep Nov 87) Lost 30% 18 Months 7 Months +23% Gulf War Crisis ( ) Lost 15% 4 Months 2 Months +34% Source: Compustat, Ibbotson Associates, and Jackson National Life Distributors. 1 Hold & Buy More strategy assumes that a portfolio added the same amount as originally invested at the market bottom. A program of regular investing does not assure a profit or protect against depreciation in a declining market. Past performance is no guarantee of future results. Chart is for illustrative purposes only and is not representative of the future performance of any particular portfolio, security or strategy. ility

6 The Power of Long-Term Investing Curian s Custom Style Portfolios provide you with customized control of your investments an exciting new opportunity for investing. With a Custom Style Portfolio, you enjoy: Custom asset allocation based on your investment objectives, risk tolerance and time horizon, with the flexibility to exclude certain asset classes or individual securities. Broad diversification across multiple asset classes, investment styles and institutional money managers. Continuous monitoring and oversight providing management and monitoring of your plan to ensure your investments stay on track toward achieving your goals. For more complete information on the Curian Custom Style Portfolio Program, including fees and expenses, please call toll-free for a free Wrap Fee Program Brochure. This brochure is also available from your Financial Professional. Please read the Wrap Fee Program Brochure carefully before you invest or send money. Curian Capital, LLC acts as the Registered Investment Advisor for Curian Custom Style Portfolios. Curian Clearing, LLC (member FINRA/ SIPC) is the exclusive broker for these programs, for which it provides brokerage execution, processing and custody services. It s important to realize that investments in a managed account involve investment risk, including possible loss of principal amount invested. Investment return and principal value will fluctuate so that the investment, when redeemed, may be worth more or less than the original investment. IADV /08