Chart of the Week: The Price of Being Out of the Market

Price of being out of market

As the media bombards your clients with countless articles referencing an impending bear market (roughly 1,400 by Bloomberg in the month of August alone), your role as a financial advisor has become just as crucial as it is difficult. Of all the roles you fill as a financial advisor, the benefit of keeping your clients’ emotions in check and their money off the sideline cannot be understated. This chart shows that, during the 14 year period of 12/31/1999-12/31/2015, if your client were to be sidelined from the market on just 10 of the best days of the S&P 500, their annualized return would be 472 bps lower (and in negative territory) than if they had stayed fully invested for the entire period. In such a turbulent quarter, it is of upmost importance to keep your client educated on the longer term benefits of a disciplined investment approach and well-diversified portfolio. See more tools from T. Rowe Price to help you properly inform your clients what they need to focus on during market volatility by clicking here (no log-in needed).

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