Emerging market indices, known for their high return potential, offer compelling evidence for the long-term investing approach. Take, for instance, the Nasdaq 100 Index, which includes 100 of the largest and most innovative non-financial companies listed on the Nasdaq Stock Market. Between December 31, 2007, and June 28, 2019, this index boasted an average annualized return of about 13%. While it's true that such indices may exhibit higher risk and volatility, their growth potential over time is undeniable.
2. The Stability of the S&P 500:
The S&P 500, representing 500 leading U.S. companies and covering approximately 80% of the market capitalization, is often seen as the best single gauge of large-cap U.S. equities. During the same period, it averaged a 9% annualized return, albeit with less volatility than the Nasdaq 100. This stability and consistent growth underscore the benefits of long-term investing in well-established indices.
3. Avoiding Emotional Trading:
One of the most significant advantages of long-term investing is the ability to sidestep emotional trading, which often undermines investor returns. Historical setbacks, including the Great Depression, Black Monday, the tech bubble, and the financial crisis, have all demonstrated that investors who stayed the course with their investments in major indices like the S&P 500 or Nasdaq 100 ultimately realized gains. This resilience through market highs and lows highlights the strength of a long-term investment strategy.
Making the Most of Your Investing Years
Long-term investing is not merely a strategy but a philosophy that emphasizes patience, perseverance, and a forward-looking perspective. It's about recognizing that while markets may fluctuate, the trajectory of well-chosen investments is upward over time. For business owners and individual investors alike, adopting a long-term outlook can significantly impact the growth of your investment portfolio.
If you're contemplating your investment strategy or seeking to optimize your portfolio for the long haul, reaching out for professional guidance can be invaluable. Whether it's understanding the nuances of different market indices or crafting a diversified investment plan that aligns with your goals, a conversation with a financial advisor can provide clarity and direction.
Final Thoughts
Investing for the long term is a proven path to financial success in the stock market. It allows investors to benefit from the growth potential of indices like the Nasdaq 100 and the S&P 500 while minimizing the impact of volatility and emotional decision-making. As you navigate your investing journey, remember that the most significant returns come from patience and persistence, not from attempting to outguess the market.
* The information contained in this material is for general information only and are those of the author, and not a recommendation or solicitation to buy or sell investment products. This material was developed and produced by Levitate which is not affiliated with the named broker-dealer. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.
Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.
S&P 500 - A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
