Plan for highs and lows

The stock market may appear an uncertain place to put your money. Markets move continually as they react to economic news and to supply and demand for shares. Daily movements in the stock market can be sudden and sharp but investors should be prepared for such volatility.

The chart below groups yearly stock market returns and shows that, historically, poor performance years (shown in orange) are often followed by significant market rises (shown in dark blue). Investors who retreat when markets have fallen can miss out on the ‘rebound’ that follows.

Tip! Focus on what is likely to happen over the entire period of your investment plan – not on what will happen tomorrow.

The chart shows yearly stock market returns where historically poor performance years are often followed by significant market rises.