Charting a Long-Term Course

Investors with a long-time horizon should consider maintaining a long-term perspective and avoid overreacting to market volatility.

Stock market volatility can be a wild ride. If you follow the daily price movements of a stock market index, it's enough to make you dizzy at times. If you watch the same index's performance over longer periods, however, you may notice that things tend to smooth out.

Unless you're close to retiring and will need to tap your assets soon, taking the long-term view probably makes sense. Rather than making investment decisions based on day-to-day or even quarter-to-quarter performance, step back and look at how your investments are doing over longer periods.

Stocks Over the Long Term

Of the three major investment types -- stocks, bonds, and cash alternatives¹ -- stocks are attractive to long-term investors because they have historically provided the best opportunity for growth and the highest relative return over the long term. However, stocks have more short-term volatility than the other two investment types, so they carry more risk.

Time Makes the Difference

It's never good when prices drop and your stock investments lose value. It's particularly bad news if you’ll need your money soon. But when you have time on your side, you can focus on an investment's long-term performance numbers (and the stock market's overall long-term performance) instead of its day-to-day ups and downs.

Although past performance is no guarantee of future returns, and it has sometimes taken years, the stock market has always bounced back following periods of price drops. When you have time to wait, your stock investments could rebound following any future market dips.

Annual Stock Returns: 1994-2024²

This chart shows the calendar-year returns for the index representing U.S. stocks for the past 30 years. Past performance is not a guarantee of future results.

Your situation is unique, so be sure to consult a professional before taking action. Contact Popular’s Retirement Center at educacionretiro@popular.com. If you have a 401k plan with Popular, remember that you can count on our group of experts at TeleBanco Popular® to guide you on matters related to your retirement plan. Call us at 787-724-3657 (press option 2 three times).

¹Note that cash alternative investments may not be federally guaranteed or insured and that it is possible to lose money by investing in cash alternatives. Returns on cash alternative investments may not keep pace with inflation, so you could lose purchasing power.

²Source: ChartSource^®, SS&C Retirement Solutions, LLC. For the period from January 1, 1994, through March 31, 2024. Stocks are represented by the S&P 500 index. It is not possible to invest directly in an index. Index performance does not reflect the effects of investing costs and taxes. Actual results would vary from benchmarks and would likely have been lower. Past performance is not a guarantee of future results. © 2024 SS&C. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions. (T2C20)

*You should carefully consider a fund's investment objectives, charges, expenses, and risks before you invest. The fund's prospectus, which can be obtained from your financial representative and/or or through the management platform of your digital retirement plan, https://www.yourbenefitaccount.com/banco/, contains this and other information about the fund. Read the prospectus carefully before you invest or send money. Shares, when redeemed, may be worth more or less than their original cost.

The information and general descriptions found in this article are designed to help you understand some of the factors you should generally consider when evaluating the appropriateness of any strategy or investment within your retirement plan. Any description included is for informational and educational purposes and for your independent consideration only; it should not be regarded or viewed as advice or as a recommendation to take (or refrain from taking) any particular action. By providing this information, we assume that you can evaluate this information and the general descriptions found here to exercise your independent judgment. Banco Popular de Puerto Rico, its subsidiaries and/or affiliates are not engaged in rendering legal, accounting or tax advice services. If legal, accounting, or tax advice services are required, you should seek the services of a competent professional.

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© 2024 SS&C. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.