Three Key Principles for Long-Term Investing

As we reflect on recent stock market volatility at the start of 2025, it’s a good moment to revisit some timeless investment principles. Sharp market movements can feel unsettling, but history reminds us that a disciplined, long-term investment strategy is what ultimately delivers results.

1. Time in the Market Beats Timing the Market

It’s natural to want to avoid losses by jumping in and out of markets. But trying to time the market is a risky game. Even missing just a few of the best-performing days can dramatically reduce your returns.

Key Market Insight:
Between 1993 and 2023, an investor who remained fully invested in the S&P 500 would have earned an average annual return of 9.7%. But missing just the 10 best days would have cut that return to 5.5%. Missing the 30 best days would have meant negative returns.

Investor Takeaway:
Reacting emotionally to short-term swings can harm long-term growth far more than a temporary dip ever could.

2. Market Corrections Are Normal – Not a Sign to Panic

Stock market declines, while uncomfortable, are a natural and necessary part of the investing cycle. Markets regularly experience corrections (a drop of 10% or more), and occasionally bear markets (20%+ declines). These events are not the exception—they’re the norm.

Key Market Insight:
Since 1950, the S&P 500 has fallen by at least 10% on 38 occasions. In every case, it has eventually recovered and gone on to reach new highs. Even the Global Financial Crisis and the COVID-19 crash were followed by strong rebounds.

Investor Takeaway:
Volatility is the price of admission for long-term returns. Reacting emotionally can lead to locking in losses, whereas patience is nearly always rewarded.

3. A Strong Financial Plan Keeps You Grounded

Investing success is about more than picking the right shares or funds—it’s about building a financial plan that gives you the confidence to stay the course.

Key Market Insight:
During the 2008 financial crisis, investors who maintained a diversified portfolio saw full recovery within five years. Those who panicked and sold often missed the rebound, turning paper losses into permanent ones.

Investor Takeaway:
A robust plan includes diversified investments, a suitable level of risk, and a clear view of your goals and timelines. Having an emergency fund and knowing your strategy reduces the temptation to react impulsively when markets dip.

The value of investments can go down as well as up. The return at the end of the investment period is not guaranteed and you might not get back the full amount invested.

Final Thoughts: Stick to the Plan

Market volatility is unavoidable, but it doesn’t have to derail your progress. The greatest threat to long-term wealth is often not market drops—but making poor decisions in response to them.

Whether it’s interest rate shifts, geopolitical tension, or economic headlines, markets will always move. But the core principles remain the same: stay invested, stay diversified, and stay focused on your goals.

If you’d like to understand how recent events affect your personal investment strategy—or to revisit your long-term plan—get in touch with your adviser or watch our latest market update video below.