28245 FIC 133913 - Investing for Success Series
INVESTING FOR SUCCESS
Perspective on market behaviour over the short and long term
INVESTING FOR SUCCESS
Focus on the big picture ? 40 years of returns examined
Many events have affected markets in the past; however, over the long term, markets have historically bounced back. Investors who stayed the course increased their wealth ? and as you can see, the longer they stayed invested, the better.
$1,400,000 $1,200,000 $1,000,000
$800,000
"DJIA falls 508
"The Russian
"Global financial crisis
points (-22.6%)
central bank stops
and total collapse of
on 604 million
supporting the
large financial institutions,
shares ? sharpest
ruble and allows
including Lehman Brothers"
one-day drop in history"
it to collapse" 08/26/1998
2008
10/19/1987
"European
"Reagan states we've inherited
`the worst economic mess since the
"Berlin Wall crumbles
and Germany begins
reunification"
"World Trade Center and
Pentagon terrorist attacks results in 14.3% loss for DJIA from
09/10/01 to 09/21/01"
09/11/2001
sovereign debt crisis ? Greece's credit rating dropped
to CCC"
6/13/2011
depression'" 1
11/09/1989
02/05/1981
$600,000
U.S.-China trade war
ANNUALIZED RETURN
TOTAL INVESTMENT
VALUE
12.7% $1,180,504
11.8% $873,584
9.3% $354,152
8.8% $290,813
5.9% $100,588
5.6%
$88,182
3.0%
$32,792
VALUE OF $10,000
$400,000
$200,000
$10,000 INITIAL INVESTMENT
$0 1980
1986
1993
1999
2006
2012
U.S. small-cap equities U.S. equities Canadian bonds Canadian equities Canadian five-year GIC Canadian T-bill Canadian inflation
2019
January 1, 1980, to December 31, 2019, inclusive. 1 Address to the Nation on the Economy, February 5, 1981. The graph represents an investment of $10,000 in stocks, bonds and cash (as indicated above), and accounts for inflation from January 1, 1980, through December 31, 2019. The mathematical table is used to illustrate the effects of the compound growth rate and is not intended to reflect future values of the fund or returns on investment in any fund. All indicated returns are total returns in Canadian dollars as at December 31, 2019. It is not possible to invest directly in an index. Indexes are not managed and do not have management fees and expenses. Sources: Ibbotson Associates, Refinitiv, TSX Group, Bank of Canada, Department of Monetary and Financial Analysis and Fidelity Investments Canada ULC. Indexes used: U.S. small-cap equities: Ibbotson U.S. Small Stock Index; U.S. equities: S&P 500 Index; Canadian equities: S&P/TSX Composite Index; Canadian bonds: FTSE Canada Universe Bond Index; Canadian five-year GIC: chartered bank-administered rates; Canadian T-bills: FTSE Canada 91-Day T-Bill Index; inflation: Canadian consumer price index.
For more information, ask your advisor or visit fidelity.ca
Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in mutual funds and ETFs. Please read the mutual fund or ETF's prospectus, which contains detailed investment information, before investing. Mutual funds and ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.
Proud to sponsor
? 2020 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC. Third-party trademarks are the property of their respective owners. Used with permission.
FIC-269452 02/20 138232-v202035
61.757523E
BEST
INVESTING FOR SUCCESS
Think globally.
When it comes to investing, most of us seldom leave home. But since Canada makes up approximately 3% of the world's markets, investing solely in the Canadian market limits both investment opportunities and diversification.
Investing abroad can introduce additional risks: shifts in currency values, political and economic upheaval or poorly regulated markets. But it can also bring benefits: rapidly growing economies and well-established companies.
And as the chart shows, Canada and other international stock markets tend to move in different directions in relation to each other ? so investing in different parts of the world can bring both balance and greater growth to your portfolio.
Performance of Canadian vs. international markets: 2008?2019
2008 2009 2010 2011 2012 2013
CANADIAN CANADIAN CANADIAN CANADIAN EMERGING
U.S.
BONDS: SMALL CAP: SMALL CAP: BONDS: MARKETS: SMALL CAP:
6.4% 68.9% 35.2% 9.7% 16.4% 48.1%
2014
U.S. EQUITY:
23.9%
2015
U.S. EQUITY:
21.6%
2016 2017
CANADIAN EMERGING SMALL CAP: MARKETS:
31.9% 28.7%
2018
U.S. EQUITY:
4.2%
2019
U.S. EQUITY:
24.8%
U.S.
EMERGING
U.S.
SMALL CAP: MARKETS: SMALL CAP:
-17.2% 52.0% 20.2%
U.S. EQUITY:
4.6%
FOREIGN EQUITY:
15.3%
U.S. EQUITY:
41.3%
GLOBAL EQUITY:
15.0%
GLOBAL EQUITY:
19.5%
CANADIAN EQUITY:
21.1%
FOREIGN EQUITY:
17.4%
CANADIAN CANADIAN BONDS: EQUITY:
1.4% 22.9%
U.S. EQUITY:
-21.2%
CANADIAN CANADIAN
U.S.
EQUITY: EQUITY: SMALL CAP:
35.1% 17.6% -1.8%
GLOBAL EQUITY:
14.0%
GLOBAL EQUITY:
35.9%
U.S.
FOREIGN
U.S.
SMALL CAP: EQUITY: SMALL CAP:
14.3% 19.5% 17.1%
GLOBAL EQUITY:
15.0%
GLOBAL EQUITY:
0.1%
CANADIAN SMALL CAP:
21.9%
GLOBAL EQUITY:
-26.9%
GLOBAL EQUITY:
13.0%
EMERGING MARKETS:
13.0%
GLOBAL EQUITY:
-2.7%
U.S. SMALL CAP:
13.8%
FOREIGN EQUITY:
31.6%
CANADIAN
U.S.
EQUITY: SMALL CAP:
10.6% 14.6%
U.S. EQUITY:
8.1%
U.S. EQUITY:
13.8%
U.S. SMALL CAP:
-3.0%
GLOBAL EQUITY:
21.9%
FOREIGN EQUITY:
-28.8%
FOREIGN EQUITY:
12.5%
U.S. EQUITY:
9.1%
CANADIAN EQUITY:
-8.7%
U.S. EQUITY:
13.4%
CANADIAN CANADIAN CANADIAN EMERGING CANADIAN EQUITY: BONDS: BONDS: MARKETS: EQUITY:
13.0% 8.8% 3.5% 7.7% 9.1%
FOREIGN EQUITY:
-5.6%
U.S. SMALL CAP:
19.2%
CANADIAN EQUITY:
-33.0%
U.S. EQUITY:
9.3%
CANADIAN BONDS:
6.7%
FOREIGN EQUITY:
-9.6%
CANADIAN EMERGING EMERGING EMERGING EQUITY: MARKETS: MARKETS: MARKETS:
7.2% 4.7% 7.0% 2.4%
GLOBAL EQUITY:
4.4%
U.S.
EMERGING
SMALL CAP: MARKETS:
7.1% -6.5%
FOREIGN EQUITY:
16.5%
EMERGING
U.S.
MARKETS: SMALL CAP:
-41.4% 8.0%
GLOBAL EQUITY:
6.6%
CANADIAN CANADIAN CANADIAN FOREIGN SMALL CAP: BONDS: SMALL CAP: EQUITY:
-14.2% 3.6% 4.3% 4.1%
CANADIAN CANADIAN CANADIAN CANADIAN EMERGING EQUITY: BONDS: SMALL CAP: EQUITY: MARKETS:
-8.3% 1.7% 4.0% -8.9% 12.9%
CANADIAN CANADIAN SMALL CAP: BONDS:
-48.6% 5.4%
FOREIGN EQUITY:
2.6%
EMERGING CANADIAN CANADIAN CANADIAN CANADIAN MARKETS: SMALL CAP: BONDS: SMALL CAP: SMALL CAP:
-16.2% -0.5% -1.2% -2.8% -16.3%
FOREIGN EQUITY:
-2.0%
CANADIAN CANADIAN CANADIAN BONDS: SMALL CAP: BONDS:
2.5% -20.3% 6.9%
Sources: Fidelity Investments Canada ULC, Refinitiv. Total returns in CDN$. Note: It is not possible to invest directly in an index. Asset class performance represented by: foreign equity: MSCI EAFE Index; global equities: MSCI World index; emerging markets equity: MSCI Emerging Markets Investable Market Index ; U.S. equity: S&P 500 Index; U.S. Small Cap: Russell 2000 Index; Canadian equities: S&P/TSX Composite Index; Canadian small cap: BMO Small Cap Blended Weighted Index (Price Return); Canadian bonds: FTSE Canada Universe Bond Index. As at December 31, 2019.
For more information, ask your advisor or visit fidelity.ca
PERFORMANCE
WORST
Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in mutual funds and ETFs. Please read the mutual fund or ETF's prospectus, which contains detailed investment information, before investing. Mutual funds and ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.
Proud to sponsor
? 2020 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC. Third party trademarks are the property of their respective owners. Used with permission.
FIC-269452 02/20 138231-v202035
61.106120E
INVESTING FOR SUCCESS
Time is money.
It's easy to put off investing. The common perception is that if you don't have enough money to invest now, it's better to contribute more later. But in fact, one of the best ways to build wealth is to start early ? even if it's only a small amount.
John makes ten annual contributions of $5,000 and receives an 8% annual return. He stops investing after ten years, and holds on to the investment for a further ten years, at an 8% annual return.
Susan makes ten annual contributions of $10,000 at an 8% annual return. She ends up with less than John, even though she invested twice as much money, because she started later.
So the sooner you invest, the more time your money has to grow and benefit from the power of compounding.
The power of compounding
$200,000
$150,000
$100,000
$50,000 John
Susan
$0 YEAR 1
YEAR 10
YEAR 20
Years contributed Years invested Total amount contributed
John 10 20
$50,000
Susan 10 10
$100,000
Total amount at the end of the period
$168,887
$156,455
This example assumes an 8% annual return during years invested. The rate of return shown is used to illustrate the effects of the compound growth rate and is not intended to reflect future values of the fund or returns on investment in any fund.
Source: Fidelity Investments Canada ULC.
For more information, ask your advisor or visit fidelity.ca
Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in mutual funds and ETFs. Please read the mutual fund or ETF's prospectus, which contains detailed investment information, before investing. Mutual funds and ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.
Proud to sponsor
? 2020 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC. Third party trademarks are the property of their respective owners. Used with permission.
FIC-269452 02/20 138233-v202035
61.106115E
INVESTING FOR SUCCESS
The risks of "safe" investments
When calculating your investment goals, you should always factor in inflation. Although inflation is currently low, the future holds no guarantees ? and even low rates can eat away at your savings.
The risk of inflation is one reason so-called "safe" investments such as GICs may not be so safe after all. Often they have low returns, so on their own they may not generate enough to meet your goals, once the increased cost of living is factored in.
Consider diversifying your portfolio with equities for better growth potential, to offset the impact of inflation.
Erosion of purchasing power
The chart illustrates the effect of inflation on $10,000. Even at the relatively low rate of 2%, $10,000 shrinks to $6,729 of purchasing power in 20 years.
$10,000
2% inflation
4% inflation
6% inflation
$8,000
$6,000
$4,000
$2,000
$0 TODAY 5 YRS 10 YRS 15 YRS 20 YRS
Source: Fidelity Investments Canada ULC.
TODAY 5 YRS 10 YRS 15 YRS 20 YRS
TODAY 5 YRS 10 YRS 15 YRS 20 YRS
For more information, ask your advisor or visit fidelity.ca
Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in mutual funds and ETFs. Please read the mutual fund or ETF's prospectus, which contains detailed investment information, before investing. Mutual funds and ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.
Proud to sponsor
? 2020 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC. Third-party trademarks are the property of their respective owners. Used with permission.
FIC-269452 02/20 138230-v202035
61.106119E
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