Five timeless principles for investing success
While investing in volatile times can sometimes challenge your discipline and commitment, there are timeless principles to include in your investment strategy that can help ease your mind and keep you focused on the long term.
1 - Think diversification
It’s rare for any investment to repeat as a top performer from one year to the next. Diversifying across various economies, businesses, countries, and popular investment classes can help spread risk, remain more consistent, and reduce the potential for underperforming assets to impact your portfolio.
Historical asset class rotation, 2013–2023
Calendar year total returns by class assets (%)
Source: Manulife Investment Management, Bloomberg, as of December 31, 2023. Total returns are shown in local currency or in USD for multimarket indexes.
2 Be rational, not emotional
In good times, investors are excited, they want to invest more and often “buy high.”
When markets turn negative, investors become fearful and decide to cut their losses and “sell low."
Stay disciplined and committed to your long-term investment plan to avoid riding the emotional roller coaster.
An investor’s emotional roller coaster
3 - Missed days means missed opportunities
The difference between investment success and disappointment can boil down to a few days of being in or out of the markets.
By staying fully invested and not missing the best 20 investment days over the last 20 years, investors would have more than doubled their investments.
Growth of $10,000 in S&P/TSX Composite Total Return Index from 2013–2023
4 - Over time markets have been strong
Accept the fact that markets will rise and fall but over time markets have always moved higher.
Taking a long‑term perspective can help you stay the course when markets move from crisis to opportunity and back again.
Despite setbacks, the S&P/TSX Composite Total Return Index shows growth over the long term
Growth of $10,000
5 - Turn market volatility to your advantage
By investing a fixed dollar amount in regular intervals dollar cost averaging can help you buy more units of an investment at lower prices and fewer at higher prices.
This helps take the worry out of making a single lump-sum investment at the wrong time.
12-month comparison
$12,000 single lump-sum investment vs. $1,000 monthly investment using dollar cost averaging
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Discover how timeless investment principles can help you manage risk through different market conditions and likely improve your investment results.
Important disclosures
Important disclosures
A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange-trading suspensions and closures, and affect portfolio performance. For example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. The impact of a health crisis and other epidemics and pandemics that may arise in the future could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate other preexisting political, social, and economic risks. Any such impact could adversely affect the portfolio’s performance, resulting in losses to your investment.
This material was prepared solely for educational and informational purposes and does not constitute a recommendation, professional advice, an offer, solicitation, or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security. Nothing in this material constitutes investment, legal, accounting, or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you.
Investing involves risks, including the potential loss of principal. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments.
Past performance does not guarantee future results, and you should not rely on it as the basis for making an investment decision.
Diversification does not guarantee a profit or protect against loss in any market.
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