10 Principles of Long-Term Investing Resilience Playbook

10 Principles of Long-Term Investing Resilience

Powering through the ups and downs

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10 Principles of Long-Term Investing Resilience

Powering through the ups and downs

It's hard to stay calm when you're bombarded by news about the economy and markets. Anxiety about your portfolio can creep in, and before you know it, a media barrage may turn your anxiety into panic. And if that's not enough, investing has become more complex, pushing investors to take on more risk to achieve the same return of 10 or 20 years ago.* So how do you keep calm when market volatility heats up? By considering the 10 Principles of Long-Term Investing With Resilience.

1

Understand Market Movements

6

Diversification Benefits

2

Volatility Is Normal

3

You Control Your Emotions and Behavior

4

Take a Longer View

5

Compounding and How It Works

7

Investments Should Align With Your Goals

8

Importance of Proper Allocation

9

Understanding Risk Is Critical

10

Benefits of Working With a Professional

* Source: Wilshire Analytics. Hypothetical portfolios were created using historical index risk, return and correlations to achieve a 7.5% total return. Portfolios rebalanced monthly. All dates are as of December 31, 2017. Risk is measured by standard deviation.

Key points

nA selloff, a correction, a bear market. Whatever it's called, it can be unsettling; yet, market declines are inevitable and completely normal.

nTime after time, the stock market has recovered from the disruptive, but ultimately short-term, declines and has gone on to post gains.

1 Understand Market Movements

Markets have been resilient: History has shown declines have not lasted.

Calendar year returns

n Largest Intra-year decline

40

34% 31%

30 26%

26%

27%

26%

27%

26%

20

17%

15%

15%

12%

10

1%

2%

0

7% 4%

20%

20%

14%

9%

3%

4%

-2%

-10

-10% -7%

-8% -9%

-20 -17%-18%-17%

-13%

-8%

-7% -8%

-6%

-6%

-5%

-9%

-3%

-8%

-11%

-10% -13%

-12%

-8% -7% -8% -10%

-14%

-20%

-19% -17% -23%

-30 -30%

In the past 39 years, only 9 declines have led to a down year.

23% 13%

30% 13%

11%

19% 10%

0%

-1%

-3% -6%

-6% -7%

-10%

-12%-11%

-16% -19%

-20%

-28%

-40

-34%

-34%

-38%

-50 1980

1985

1990

1995

2000

2005

-49%

2010

2015

Moving out of stocks potentially locks in losses and may prevent you from profiting from subsequent gains.

FactSet and S&P US. Daily data as of 31 December 1979 to 31 December 2018. Returns above are in US dollars and calculated based on the S&P 500 Price Return Index. The S&P 500 Index measures the broad US stock market. Largest Intra-year decline is the largest drawdown (peak-to-trough) within each calendar year. This data is not intended to represent the performance of any MFS Portfolio. It is not possible to invest in an index.

2 Volatility Is Normal

Key points

nMarkets are always moving -- up, down and sideways. They rarely go straight up.

nOver time, stock markets have moved higher, bouncing back from ultimately short-term declines.

nAnd if you sell when the market falls, you'll likely miss a potential rebound and any subsequent gains, possibly falling short of your goals.

DOW JONES INDUSTRIAL AVERAGE

Historically, bull markets have beaten bears and driven long term gains.

History of Dow Jones Industrial Average from 4/28/42?12/31/18

100,000 10,000 1,000

AVERAGE BULL MARKET RETURN:

Up 144.6%1

AVERAGE DURATION:

Over 3 years1

5/29/46 128.7% Bull-market gain

8/25/87 250.4%

12/13/61 354.8%

1/11/73 66.6%

4/27/81 38.0%

2/9/66 85.7%

12/3/68 32.4%

9/21/76 75.7%

7/16/90 72.5%

10/11/90 -21.2%

1/14/00 395.7%

3/19/02 10/9/07 29.1% 94.4%

10/9/02 -31.5%

3/9/09 -53.8%

9/21/01 -29.7%

100 4/28/42

10 1940

6/13/49 -24.0% Bear-market drop

5/26/70 -35.9%

2/28/78 -26.9%

10/19/87 -36.1%

10/7/66 -25.2%

6/26/62 -27.1%

12/6/74 -45.1%

8/12/82 -24.1%

1950

1960

1970

1980

1990

AVERAGE BEAR MARKET RETURN:

Down 31.7%1

AVERAGE DURATION:

1 year1

2000

2010

3/9/09? 12/31/18 256.3%

2018

Investing for the long term and having a disciplined plan can help you work toward reaching your goals.

Source: SPAR, FactSet Research Systems Inc. Past performance is no guarantee of future results. It is not possible to invest in an index. 1 Dow Jones Industrial Average from 4/28/42?12/31/18. Returns are shown based on price only.

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