Stay calm in the face of an
emergency. That is the rule
of thumb in pretty much every
situation in life, and it applies just
as well to retirement planning
in a stormy economy. The
first reaction of many in these
circumstances may be to jump
ship. In response to the turbulent
waters of today’s financial
markets, many investors consider
or take the path of selling their
assets that have experienced
losses and taking refuge in safer
assets such as government
bonds or other investments
with strong guarantees.
Weathering the Storm
Reacting to the current nancial climate
Keep an eye to the horizon
Reacting to market downturns by abandoning your long term strategy can have
a significant impact. As the following chart illustrates, had you invested $10,000
in the securities included in the S&P 500 Index on Dec 31, 2011, your investment
would have grown to $37,322 by Dec 31, 2021 - an average annual total return
of 14.08%. In contrast, had you pulled your money out of the market during one
of the low points of that 10 year period, you could have missed out on most (or
even all) of the investment gains in the S&P during the period. If you missed the
market’s 10 best days of that period, your 14.08% average annual total return
would have decreased to 7.58%. What’s more, had you missed the market’s
20 best days, your average total return would have decreased to 4.48%.
Missing the market’s best days can be a costly mistake
12/31/2011 - 12/31/2021
Investment Period
Average Annual
Total Return
Growth
of $10,000
Fully Invested 14.08% $37,322
Missing the 5 best days
9.99% $25,903
Missing the 10 best days 7.58% $20,761
Missing the 15 best days
5.86% $17,668
Missing the 20 best days 4.48% $15,507
Past performance is no guarantee of future results. Performance shown is historical index performance and not
illustrative of any specific funds Performance. This is a hypothetical example used for illustrative purposes only. The return
figures are based on a hypothetical $10,000 investment in the S&P 500 Index from Dec 31, 2011 through Dec 31, 2021. The
lump sum investment in common stocks would have reflected the same stocks/weighttings as represented in the S&P 500
Index. The example does not represent or project the actual performance of any security, or other investment product.
The hypothetical figures do not reflect the impact of any commissions, fees or taxes applicable to an actual investment.
The S&P 500® Index is an unmanaged, market capitalization-weighted index of 500 widely held U.S. stocks recognized
by investors to be representative of the stock market in general. It is provided to represent the investment environment
existing for the time period shown. The returns shown do not reflect the actual cost of investing in the instruments that
comprise it. You cannot invest in an index. Source: Commodity Systems, Inc. (CSI) via Yahoo Finance.
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Stay the course
When it comes to investing keep in
mind risk is part of the equation. You
should consider reducing that risk by
ensuring your portfolio is diversified at
two levels: between and within asset
categories. Additionally, a disciplined
asset allocation strategy, focused on
long-term risk and return tradeos
that are appropriate based on an
investor’s investment time horizon
and risk tolerance, can help enhance
an investor’s likelihood of meeting
his or her investment goals. However,
using diversification/asset allocation
as part of your investment strategy
neither assures nor guarantees better
performance and cannot protect
against loss in declining markets.
For those with a suciently long
investment horizon, and a tolerance
for market risk, riding out the storm
may pay o.
The following chart shows how one
dollar invested in the S&P 500 Index in
December of 1981 and left alone until
December of 2021 (an expanse of time
that witnessed the financial panic of
1987, the September 11 terrorist attack
in 2001, and the financial crisis of
2008) would have grown to $38.89*
during those years. This illustrates
historically the potential of remaining in
the market for the long term.
* Only includes market growth; does not take inflation
into account.
Don’t go overboard
As tempting as it might seem to reach into your retirement savings to get
through these challenging times, the drawbacks outweigh the benefits. Hardship
withdrawals and loans against your retirement savings account are some of
the choices you may have, but you should understand the long term eects
of these short term solutions. Hardship withdrawals can only be taken under
certain circumstances, incur tax liability and often require fees. With a loan, you
take a portion of your retirement money out of your account for some period of
time, and thus miss out on the potential return on the amount borrowed. Loans
also may impact your withdrawal value and limit participation in future growth
potential. Plus, if you default on repayment, the money will be treated as a
distribution, subject to income tax and possibly an IRS 10% premature distribution
penalty tax.
At Voya, we are here to help you navigate these uncertain waters and help you
develop a long-term investment strategy that is suited to you. Contact your
Voya representative today to review your personal situation.
This chart is for illustration purposes only and represents a hypothetical investment in the S&P 500® Index. Such a
performance does not represent the performance of any Voya® fund. Index performance assumes reinvestment of all
income. The S&P 500 is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance
on the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major
industries. An investor cannot directly invest in an index. However, this index accurately reflects the historical performance
of the represented assets. Investing involves risks of fluctuating prices and the uncertainties of rates of return and yield
inherent in investment.
Source: Commodity Systems, Inc. (CSI) via Yahoo Finance. *Only includes market growth.
S&P 500 Index Growth of $1 Including Reinvestment of Dividends
(12/31/1981 - 12/31/2021)
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
$38.89
Ending Value
5085113
