When you think of how time helps you achieve investment objectives, the first thing that comes to mind may be compound growth. You make an investment, reinvest your returns year after year, and continue to earn returns on both your original contribution and all of the accumulated returns. Given enough time, the value of the growth can exceed that of your original investment.
But can time also be an investor’s ally during periods when markets are down and a portfolio has lost value?
Focus on your investment time horizon
After the exceptional performance of Canadian and U.S. stock markets in 2021, this year’s market correction came as a shock. However, although past performance doesn’t guarantee future results, it’s reassuring to know that market corrections have inevitably been followed by recoveries. That means time is on your side when you’re investing for a long-term goal, such as retirement.
Focus on the time you’ll begin to access the funds, not on the ups and downs along the way. What matters is having the desired financial resources in place at the time they’re needed. Patience may be required, because some recoveries take longer than others. However, markets have always rebounded, and investors have been able to get back on track.
A silver lining
Meanwhile, a down market comes with a silver lining: a buying opportunity. You can purchase more shares or fund units while prices are lower, aiming to boost your portfolio value when stock prices recover. This is why it’s important to continue making regular investments during a correction or bear market.
We’re always here
It’s natural for any investor to worry when they experience a decline in their portfolio value due to market volatility. If you have any concerns, please talk to us. We can help reassure you that you’ll achieve your financial goals.