The power of patience in investing

Being a patient investor sounds simple, but it’s not always easy – especially during periods of market volatility or declining portfolio returns.

When your portfolio performance slows or dips, it’s natural to feel the urge to act. But making changes when your long-term financial goals haven’t changed could do more harm than good. A disciplined, long-term investment strategy is often built to weather these periods.

Below are common reactions investors have during market downturns – and what to do instead.

IF LOWER RETURNS MAKE YOU WANT TO TAKE ACTION

Imagine driving on the highway at full speed, then suddenly hitting bumper-to-bumper traffic. You wouldn’t get out of the car and walk – you’d stay the course and wait for conditions to improve.

Investing works the same way. Even a well-diversified portfolio will experience periods of weaker performance. During these moments, it can be difficult to stay patient.

Behavioral finance explains this reaction through recency bias and narrow framing – when investors focus too heavily on short-term performance rather than long-term outcomes.

If you’re investing for retirement or another long-term goal, your time horizon may span decades. Short-term declines don’t necessarily change your overall trajectory.

Adjusting your investment strategy too quickly may disrupt a broader financial plan that includes tax strategies, estate planning and risk management. Staying disciplined can help keep everything aligned.

IF YOU’RE TEMPTED TO CHASE MARKET RETURNS

It’s easy to compare your portfolio performance to widely reported benchmarks like the S&P 500 Index. When the market is up, you may wonder why your returns don’t match.

But most investors hold a diversified portfolio that includes multiple asset classes – such as U.S. and international stocks and bonds. These may track indexes like the S&P 500, MSCI EAFE Index or Bloomberg U.S. Aggregate Bond Index, but they’re not designed to mirror any single benchmark.

Diversification is intentional. Different parts of your portfolio may outperform or underperform at different times. Over the long term, this balance can help manage risk and smooth returns.

You may also feel pressure to match someone else’s investment success. Behavioral economists call this the peer effect. But someone else’s portfolio reflects their goals, risk tolerance and timeline – not yours.

Shifting your strategy to match someone else’s could expose you to risks that don’t align with your financial plan.

IF MARKET VOLATILITY MAKES YOU QUESTION YOUR STRATEGY

Market volatility is a normal part of investing. Economic events, geopolitical developments and unexpected news can all impact markets in the short term.

Over time, however, markets have historically demonstrated an upward trend despite periods of decline. Staying invested allows you to participate in potential recoveries as conditions improve.

It’s also important to remember that volatility works both ways. After market declines, positive developments can lead to rebounds. Missing these upward movements can impact long-term returns.

A disciplined approach – including periodic rebalancing – can help ensure your portfolio stays aligned with your goals, even as markets shift.

IF YOUR FINANCIAL SITUATION HAS CHANGED

There are times when adjusting your investment strategy may make sense – particularly if your financial circumstances, goals or timeline have changed.

This is a good opportunity to speak with a financial advisor who can help you evaluate your situation, provide an objective perspective and determine whether updates to your plan are appropriate.

Any changes should be thoughtful and aligned with your broader financial strategy – not driven by short-term market movements alone.

IF YOU’VE LOST SIGHT OF YOUR FINANCIAL GOALS

When markets fluctuate, it’s easy to focus on short-term results and lose sight of what your portfolio is meant to support.

But your financial life doesn’t stop. You may still be balancing retirement savings, mortgage payments, college funding and other long-term priorities.

A well-rounded financial plan looks beyond investments alone. It may include:

• Cash reserves for short-term needs
• Insurance strategies for protection
• Tax-efficient planning opportunities
• Estate planning considerations

Your portfolio is one part of a larger strategy. Staying focused on what you can control – including your financial decisions and long-term plan – can help you navigate uncertainty with confidence.

THE BOTTOM LINE: STAY FOCUSED ON YOUR LONG-TERM INVESTMENT STRATEGY

Market downturns and volatility are inevitable, but emotional reactions don’t have to be.

By staying disciplined, maintaining a diversified portfolio and working with a financial advisor when needed, you can keep your investment strategy aligned with your long-term financial goals.