The Rewards of Long-Term Investing | Franklin Templeton

Positive Performance Over Time

Positive versus negative average annual returns for the S&P 500 (1937–2022)¹
Though the stock market’s returns vary tremendously, the average returns for the S&P 500 were positive in 76% of the years from 1937 to 2022.

If you have questions about your equity portfolio, ask your financial professional—who can help you decide whether adjustments may be appropriate based on changes in your financial situation (including your risk tolerance, time horizon and investment objectives).

Why it May Pay to Stay Invested

Stocks are generally more volatile than fixed income, and returns can vary greatly from year to year. As a result, stock investors may be tempted to abandon a long-term strategy when the markets are down. While past performance doesn’t guarantee future results, history has shown it has been beneficial for investors to stick to a plan and stay invested for the long term.

Steady growth is the exception, not the rule

Long-term investors should consider the pattern of returns over the last 20 years and not be thrown off course by the market’s ups and downs along the way: Steady, continuous growth is the exception, not the rule.

S&P 500 Index: Annual total returns (%)²
January 1, 2003 - December 31, 2022

A few days can make a difference

Pulling money out of stocks in down periods can reduce long-term returns, because when the market bounces back, it can happen suddenly and quickly. Missing even a few trading days could mean missing some of the market’s biggest gains.

$10,000 investment made to S&P 500 Index³
January 1, 2003 - December 31, 2022

For additional information, please contact your Franklin Templeton Sales Representative.

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The Rewards of Long-Term Investing

1. Source: Franklin Templeton. Each calendar year listed in chart reflects average annual performance from December 31 of prior year to December 31 of listed year. Returns prior to 1957 are representative of the S&P 90 Index, a value-weighted index based on 90 stocks. Performance shown reflects the effects of dividend reinvestment. This chart is for illustrative purposes only and does not represent actual performance, past or future, of any investment.

The S&P 500 Index (S&P 500) is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. Performance does not reflect the impact of fees and expenses. Investors cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.

2. Source: Franklin Templeton.

3. Source: Franklin Templeton. Past performance is no guarantee of future results. All investments involve risks, including loss of principal. The chart provided is for illustrative purposes only and represents an unmanaged index in which investors cannot directly invest.

All investments involve risk, including possible loss of principal. Equity investments generally provide an opportunity for more capital appreciation than fixed income investments, but they are subject to greater market fluctuations. Fixed income securities may be subject to extension risk, which is the risk that the issuer will repay their obligations more slowly than the market anticipates in the event that market interest rates rise. Issuers also have the right to pay their payment obligations ahead of schedule in the event that market interest rates fall, subjecting investments to prepayment risk.

Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, a forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.

Franklin Resources, Inc., its affiliates and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.