Decades Of Market Data Show Why Staying Invested Works

Periods of market uncertainty are nothing new. In 2025 alone, investors have had to contend with renewed geopolitical tension, shifting interest rate expectations and the re-emergence of protectionist trade policies. The escalation of tariff measures announced in April 2025, for example, triggered sharp market reactions and heightened short-term volatility across global equities.

While events like these can feel unprecedented at the time, history provides valuable perspective. Economic shocks, political decisions and global crises have repeatedly unsettled markets, yet they have not altered the long-term trajectory of market growth.

This long-term resilience is clearly illustrated by historical data from the S&P 500. The graph shows annual average prices of the index from the seventies to 2025.

Market movements reflect changing economic conditions, investor sentiment and external events. Short-term declines are an inevitable part of investing and are not, by themselves, a sign that an investment strategy has failed.

When markets fall, investment values may decline on paper. These paper losses are uncomfortable but reversible, as markets can and often do recover.

A permanent loss occurs only when an investment is sold at a lower price than it was purchased. At that point, the opportunity for recovery is removed. This distinction underpins why staying invested through periods of volatility is so important for long-term outcomes.

Over the past fifty years, global markets have faced multiple major crises, each accompanied by widespread concern and pessimism, yet markets have always bounced back.

• In 1987, markets experienced one of the largest single-day falls in history, yet recovered and went on to reach new highs.
• During the global financial crisis of 2008, confidence collapsed and fears of prolonged decline dominated. Markets nevertheless recovered and delivered strong returns in subsequent years.
• In 2020, the rapid sell-off triggered by the pandemic led to one of the fastest market downturns on record, followed by an equally swift recovery.

In every case, investors who remained invested benefited from the eventual rebound, while those who exited during periods of fear often missed the recovery.

Long-term investment success is built on consistency rather than perfect timing. Attempting to predict market bottoms and peaks is extremely difficult, even for professionals. Missing just a handful of the strongest recovery days can significantly reduce long-term returns.

Remaining invested allows portfolios to participate in recoveries when they occur, supporting long-term wealth creation and investment management goals.

While market downturns can be uncomfortable, history offers reassurance. Volatility is temporary, but the long-term upward trend of markets has endured.

A structured financial plan helps investors stay focused when markets are unsettled. Clear goals, appropriate asset allocation and regular reviews provide a framework that supports disciplined decision-making, even during periods of uncertainty.

For those approaching retirement or relying on portfolio income, professional advice can play a crucial role. The right adviser can help manage risk, reduce the likelihood of forced selling and ensure investments remain aligned with changing personal and market circumstances.

If you would like financial planning support with any of the above, our knowledgeable advisers across the globe can help you assess your options and make informed decisions with a long-term perspective. Contact us for an appointment today.