Three keys to developing an investment strategy Your investment strategy is unique to you. It should be tailored to best suit your goals, risk tolerance, and time horizon. As you develop your strategy, consider the following:
1 Establish investment goals
2 Assess how much risk you’re willing to accept
3 Determine an appropriate time horizon
When investing, an important rule of thumb is to focus on long-term goals and not get distracted by short-term volatility (see chart below). Historically, better results have been achieved the longer the investment time horizon. However, past performance is no guarantee of future results.
Volatility is nearly impossible to eliminate, but it can present opportunity. Balancing more
What’s important to you? Are you looking for your first investment, saving for a home, or investing in your child’s education? Regardless of your financial situation, it’s never too early, or late, to start thinking about what you want to achieve and developing a plan to help you get there.
aggressive investments with lower- risk options can help create a more stable investment portfolio, designed to take advantage of the potential opportunities created by market fluctuations.
A longer time horizon has lessened the impact of volatility 2
Annual returns S&P 500 ®
WORST Performance
Range
BEST Performance
1 year 5 years 10 years 20 years
< 74.58 % >
-37.00 %
37.58 %
< 30.85 % >
28.56 %
-2.30 %
< 20.59 % >
19.21 %
-1.38 %
< 12.26 % >
5.62 %
17.88 %
2. Source: Morningstar for the period from 1/1/79-12/31/21. This chart is for illustrative purposes and is not representative of any investment or portfolio. Stocks are represented by the S&P 500 ® Index, an unmanaged index considered to be representative of the U.S. stock market in general. The chart is based on a reinvestment of income and compounded annual return, and assumes no transaction costs or taxes. Past performance is no guarantee of future results. An investment cannot be made directly into an index.
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