Skip to main content
logo
  • Investment Strategies

    Investment Options

    • Alternatives
    • Beta Strategies
    • Equities
    • Fixed Income
    • Global Liquidity
    • Multi-Asset Solutions

    Capabilities & Solutions

    • ETFs
    • Pension Strategy & Analytics
    • Global Insurance Solutions
    • Outsourced CIO
    • Sustainable Investing
  • Insights

    Market Insights

    • Market Insights Overview
    • Eye on the Market
    • Guide to the Markets
    • Guide to Alternatives
    • Market Updates
    • Guide to China

    Portfolio Insights

    • Portfolio Insights Overview
    • Alternatives
    • Asset Class Views
    • Currency
    • Equity
    • ETF Perspectives
    • Fixed Income
    • Long-Term Capital Market Assumptions
    • Sustainable Investing
    • Strategic Investment Advisory Group

    Retirement Insights

    • Retirement Insights Overview
    • Essential Elements of a Sound Retirement System
    • Building Better Retirement Portfolios
  • Resources
    • Center for Investment Excellence Podcasts
    • Insights App
    • Library
    • Webcasts
    • Multimedia
    • NEW Morgan Institutional
  • About us
  • Contact Us
  • English
  • Role
  • Country
  • Morgan Institutional
    Search
    Search
    Menu
    You are about to leave the site Close
    J.P. Morgan Asset Management’s website and/or mobile terms, privacy and security policies don't apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. J.P. Morgan Asset Management isn’t responsible for (and doesn't provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan Asset Management name.
    CONTINUE Go Back
    1. Principles for Successful Long-term Investing

    Principles for Successful Long-term Investing

    Using Market Insights to achieve better outcomes

    Market insights was founded in 2004 in the wake of the fallout from the tech bubble. At a time when investors needed it most, the first Guide to the Markets provided clarity and perspective, and helped to reinforce key habits of successful long-term investors. Today, more than a decade later, it is in that same spirit that we are pleased to offer, “principles for successful long-term investing”.

    We believe that a combination of these principles, sound financial advice and deeper insights can help make every investor better off.


     


    1. PLAN ON LIVING A LONG TIME

     


    LEFT: We are living longer

    Thanks to advancements in medicine, people are living longer and healthier lives. This chart shows that the share of population in retirement age will rise sharply across Asia over time. 

    RIGHT: The benefits of saving and investing early

    It is important for investors to start saving and investing early in order to maximize the benefits of compounding. This chart illustrates three different scenarios: one in which the investor starts savings early, but keeps those savings in cash only; one in which the investor both saves and invests in financial assets early; and one in which the investor starts later, but still allocates these savings to financial assets. The investor who started early and invested in a well-balanced portfolio is far better prepared for retirement than those who started late or invested only in cash. 


     


    2. CASH ISN'T ALWAYS KING

     



    Cash pays less

    Investors often think of cash as a safe haven. Many investors shy away from the stock market, fearing capital losses and unwanted risks in what appear to be volatile markets.

    Even at times when the equity market is struggling, the bond market can offer an attractive return compared to cash. Fixed income comes with its own risks when rates are rising, but bonds have a role in portfolios to lower overall volatility and provide steady income.

    As an example, since 1990 there have been only a handful of years where the total return for bonds was negative, and they were typically much less in magnitude than any time equities saw poor performance.


     


    3. HARNESS THE POWER OF DIVIDENDS AND COMPOUNDING

     


    LEFT: The power of dividends and compounding

    Harnessing the power of compounding can greatly impact investor returns. Placing an initial $100 into the MSCI World Index in 1970 would have given an investor nearly $2,500 today if we merely looked at the price returns.

    The compounding effect could greatly increase these returns if the same investor reinvested the dividends paid out by this equity market over time. Investing the same $100 in the MSCI World Index in 1970, but reinvesting the dividends received, would have grown this $100 to over $11,500 today.


     


    4. AVOID EMOTIONAL BIASES BY STICKING TO A PLAN; AND STAYING INVESTED MATTERS

     


    RIGHT: Avoid emotional biases

    Almost all investors are challenged by their emotions and natural biases when making investment decisions. The impulse to get in when things look good and out when things look bad can be overwhelming, but history shows us that investors tend to pick exactly the wrong time to do so.  

    Investors get caught up in the fear of missing out and put their money in right when the market is at its most expensive—and vice versa. Missing out on the best days of market performance has quite a significant cumulative effect over the years.  


    TOP: Good things come to those who wait

    While markets can always have a bad day, week, month or even year, history suggests investors are less likely to suffer losses over longer periods.

    This chart illustrates the concept. While the range of one-year stock returns has varied widely since 1950 (+47% to -39%), a blend of stocks and bonds has not produced a negative return over any five-year rolling period in the past 70 years.

    However, investors should still keep in mind the time horizon of their goals. Does your situation call for higher returns and the higher risks that come with it? Or does your plan involve making use of the return from your investments very soon? 


     


    5. VOLATILITY IS NORMAL; DON'T LET IT DERAIL YOU

     


    Volatility is normal

    Investors should remember that volatility is normal. Investing naturally involves significant drawdowns from time to time.

    Markets move in cycles and through peaks and troughs—it is almost unheard of for performance to only ever move upward. However, when popular signals start to indicate difficult times ahead, it can still pay to remain invested.

    Looking at previous drawdowns, the length of bear markets has typically been less than that of subsequent bull runs, with any losses sustained during the bear market eventually reversed with time.

    Investors should be aware of the volatility they can handle, but troubled times aren’t a sign to sell everything. 


     


    6. DIVERSIFICATION WORKS

     


    Diversification works

    The last 10 years have been a tumultuous ride for investors, with numerous natural disasters, geo-political conflicts, pandemics and market downturns. The next 10 years are likely to also be volatile, with multiple sources of uncertainty. While a recession could be avoided, investors should still familiarize themselves with the implications of an economic downturn. and be ready in case it materializes.

    Despite all of the difficulties faced by markets over the past 10 years, cash was rarely one of the best performers. Over the same period, a well-diversified portfolio of stocks and bonds returned an average of 3.9% per year with lower volatility than a pure equity portfolio.

    Markets can be volatile and even negative in any given day, week, month or year. But history shows that both time and diversification can go a long way toward a smoother investor experience.

    0903c02a824088d9

    The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the program explores the implications of current economic data and changing market conditions. 

    For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any prohibition on dealing ahead of the dissemination of investment research.

    This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

    J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide.

    To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our privacy policies at https://am.jpmorgan.com/global/privacy.

    This communication is issued by the following entities:

    In the United States, by J.P. Morgan Investment Management Inc. or J.P. Morgan Alternative Asset Management, Inc., both regulated by the Securities and Exchange Commission; in Latin America, for intended recipients’ use only, by local J.P. Morgan entities, as the case may be. In Canada, for institutional clients’ use only, by JPMorgan Asset Management (Canada) Inc., which is a registered Portfolio Manager and Exempt Market Dealer in all Canadian provinces and territories except the Yukon and is also registered as an Investment Fund Manager in British Columbia, Ontario, Quebec and Newfoundland and Labrador. In the United Kingdom, by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other European jurisdictions, by JPMorgan Asset Management (Europe) S.à r.l. In Asia Pacific (“APAC”), by the following issuing entities and in the respective jurisdictions in which they are primarily regulated: JPMorgan Asset Management (Asia Pacific) Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia) Limited, each of which is regulated by the Securities and Futures Commission of Hong Kong; JPMorgan Asset Management (Singapore) Limited (Co. Reg. No. 197601586K), this advertisement or publication has not been reviewed by the Monetary Authority of Singapore; JPMorgan Asset Management (Taiwan) Limited; JPMorgan Asset Management (Japan) Limited, which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Australia, to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Commonwealth), by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919). For all other markets in APAC, to intended recipients only.

    For U.S. only: If you are a person with a disability and need additional support in viewing the material, please call us at 1-800-343-1113 for assistance.

    Copyright 2023 JPMorgan Chase & Co. All rights reserved.

    • Market Insights
    lets-solve-it-logo

    Language master

    Phone

    E-mail

    J.P. Morgan Asset Management

    • About us
    • Investment stewardship
    • Privacy policy
    • Cookie policy
    • Binding corporate rules
    • Sitemap
    Opens LinkedIn site in new window
    J.P. Morgan

    • J.P. Morgan
    • JPMorgan Chase
    • Chase

    READ IMPORTANT LEGAL INFORMATION. CLICK HERE >

    The value of investments may go down as well as up and investors may not get back the full amount invested.

    Copyright 2023 JPMorgan Chase & Co. All rights reserved.