Emotions and the market
Reduce motion
Down markets
Up markets
Learn from history
Source: ClearBridge Investments; Anatomy of a recession June 30, 2023
Investors making decisions during periods of market stress saw average growth of only 3.1%—compared to the growth of the S&P 500 , which grew 9.8% during the same period.
Let’s explore how you can find a balance of protection and growth in your portfolio to help achieve your goals.
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Reflecting on the past 87 years (1937-2023) of the S&P 500 , market returns have fluctuated quite a bit. While market ups and downs can be overwhelming, they are a normal part of the investment journey. Historically, investors who took a longer term approach typically saw better results. While there are many factors that can affect your returns – including volatility, interest rate changes, or inflation – the biggest factor is making decisions based on emotion.
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INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, ANY BANK OR ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED
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This chart highlights the negative periods of the S&P 500 . In these 21 down years, strategies that offered a level of downside protection that could protect your account value in the case of a negative index return, such as a buffer within an annuity, could have helped limit your losses. That could have helped you feel more confident and stay the course.
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5% Buffer
10% Buffer
20% Buffer
15% Buffer
100% Buffer
30% Buffer
A 5% buffer would have protected you from a loss in 5 of those 21 down years, or 24% of the time.
If you have a hard time staying the course in your investment approach, strategies that offer a level of downside protection might be right for you.
Conversely, you would have seen a loss in the other 16 periods.
Your loss with a 5% buffer would have been only 4.1% because you would have been protected from the initial 5% decline.
In 2000
This information is hypothetical and not representative of any particular product. Past performance does not guarantee future results.
During this period, your loss with a 10% buffer would have been only 4.7% because you would have been protected from the initial 10% decline.
In 1973
Conversely, you would have seen a loss in the other 9 periods.
A 10% buffer would have protected you from any loss in 12 of those 21 down years, or 57% of the time.
During this period, your loss with a 15% buffer would have been only 3.1% because you would have been protected from the initial 15% decline.
In 2022
Conversely, you would have seen a loss in the other 5 periods.
A 15% buffer would have protected from any loss in 16 of those 21 years, or 76% of the time.
During this period, your loss with a 20% buffer would have been only 2.1% because you would have been protected from the initial 20% decline.
In 2002
Conversely, you would have seen a loss in the other 4 periods.
A 20% buffer would have protected from any loss in 17 of those 21 years, or 81% of the time.
During this period, your loss with a 30% buffer would have been only 7% because you would have been protected from the initial 30% decline.
In 2008
Conversely, you would have seen a loss in the other 2 periods.
A 30% buffer would have protected from any loss in 19 of the 21 years, or 90% of the time.
A 100% buffer would have protected from any loss in all of these years or 100% of the time.
Conversely, you may not have seen as much growth potential in up markets.
This chart highlights the 66 positive years of return of the S&P 500 .
Returns up to 6%
Returns up to 12%
Returns up to 24%
Returns up to 18%
Returns 24%+
In 10 years or 15% of the time returns ranged between 0-6%.
A strategy such as an annuity could provide you various options to participate in opportunities for growth.
In 19 years or 29% of time returns ranged between 0-12%.
In 27 years or 42% of the time returns ranged between 0-18%.
In 44 years or 68% of time returns ranged between 0%-24%.
In 66 years or 100% of the time returns were positive.
These charts look at a shorter window of time and can help focus in on more recent market activity.
There were 5,033 trading days during this 20-year period … yet, missing only 10 of them would have reduced the final return by 64%.
When seeking growth, don’t miss a day. Rebounds can happen quickly and are nearly impossible to predict.
If you had gotten out of the market after experiencing the losses, you would have missed the rebounds.
Historically, markets have rebounded for multiple years after a down year.
Source: Franklin Templeton. This information is hypothetical and not representative of any particular product. Past performance does not guarantee future results.
Questions to consider as you evaluate your overall investment plan and future needs:
be right for you along with any exclusions, limitations, reductions of benefits, and terms for keeping them in force.
Talk to your financial professional
and learn more about how an annuity might
Take steps to diversify your portfolio and be more confident overall in your retirement plan.
Do you need some downside protection? Do you want to grow as well as protect your future income? Do you need an investment option with some growth and a level of protection from loss?
Diversification does not ensure against loss in a declining market.
