How to use discipline as a tool for successful long-term investing

[Narrator] Hello! I’m Neel Mukherjee, TIAA Wealth Management’s Chief Investment Officer, and today I’d like to talk about how to best achieve your financial goals by staying disciplined and remaining invested in your customized asset allocation that is in sync with your financial goals and risk tolerance. Maybe you’ve heard some of this before, but it bears repeating.

[Narrator] Let’s think back to 2022. Stocks and bonds both fell. Inflation surged. Interest rates shot up. For many investors, it felt like the sky was falling, as a typical diversified 60/40 portfolio fell by 16%. But by staying invested during those turbulent times, as the market recovered in 2023, that portfolio recovered by just over 18%.   

[Narrator] This highlights an important fact: market volatility is normal. However, historically, stocks have risen more often than they have fallen, and missing out on the best days in the market can mean sacrificing portfolio returns, which could potentially set one back on the journey to reach their goals. Investors who remain disciplined, fully invested, and committed to their financial plans have historically seen the benefits over time. In the past 40 years, the S&P 500 has averaged an annual total return of 11%, despite periods of significant volatility. And, over the past century, the S&P 500 has ended the year positively 73% of the time, with an average total return of more than 21%, during those up years.  

[Narrator] But staying the course isn't easy, especially when the headlines are scary. That's where diversification comes in. A diversified portfolio can help balance risk, leading to more consistent returns in the long term. It can also make it more emotionally palatable to stay fully invested and make rational financial decisions.

[Narrator] So, the next time the market throws a curveball, remember the power of disciplined investing. Keep your eyes on the long term, stay committed to your plan, and consider diversification to balance risk. After all, when it comes to investing, discipline can be your best ally.

[Narrator] If you would like to learn more about how we can help create a financial plan that is right for you, please schedule a call with a TIAA financial consultant or your advisor at tiaa.org/schedulenow.