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Which portfolio would you prefer?

Which portfolio would you prefer?

January 13, 2023
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Seems like a no-brainer, right? But what if I told you that these charts are showing the SAME diversified portfolio? The difference is the time period highlighted. 


  • Chart A illustrates an example of market activity for a broad market portfolio, on a particular day or week, which appears to be in a "down" or "loss" position for that timeframe. 


  • Chart B illustrates that same broad market portfolio, but now we're seeing a "zoomed out" view, which could represent some particular quarter or year. In this longer stretch of time, the peaks and valleys of market fluctuation appear to be less pronounced.


  • Chart C illustrates that same portfolio except that this time we are looking at a 10-year-plus view. Typical broad markets, and like them, well-diversified portfolios, more often than not have positive returns when looking at 10-year (or longer) rolling periods. 


What's the point here?

1) The time period of data analysis is essential to consider. For example, the gains or losses that occur in any one month is usually not as important as the gain/losses over a longer period of time.

2) Your personal timeline for a particular savings goal is vital to understand so you can design a portfolio around that specific need. This helps guide your capacity for risk

3) Your personal propensity for taking risk is another piece of the puzzle. Just because your circumstances warrant a particular level of risk doesn't mean that's what you're comfortable with. 


A great way to make sure you're investing in an appropriate way for your personal needs and circumstances is to work with an investment advisor. Schedule a complimentary call with us today to learn more. Here: https://calendly.com/planningforgood/complimentary-initial-consultation



For reference:

You may find a sample index (the S&P 500) with historical data and charts of various time periods here:  https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview