Why You Should Stay Calm Amid Stock Market Fears The Benefits of Choosing XEQT

Investors are understandably concerned about the stock market’s recent volatility. As stock prices fluctuate, many are considering adjusting their portfolios to minimize risk. However, it’s essential to weigh these choices carefully, especially for those with a long-term investment strategy.

Understanding Market Corrections and Long-Term Strategies

Market corrections can lead to panic, prompting investors to sell stocks and shift to safer assets like bonds or cash. Yet, for individuals with a time horizon of seven years or more, this may not be necessary. Maintaining exposure to equities allows investors to withstand market downturns and capitalize on potential rebounds.

XEQT: A Strong Investment Option

For those seeking an all-equity portfolio, XEQT offers an attractive solution. The iShares Core Equity ETF Portfolio, identified by the ticker symbol XEQT, comprises 100% global stocks. This strategy emphasizes the long-term recovery potential of equity markets.

• XEQT’s approach aligns with the idea of “XEQT and chill,” promoting a buy-and-hold mentality.
• Alternatives include BMO’s ZEQT and Vanguard’s VEQT, which follow similar principles.

The Benefits of an All-Equity Portfolio

Historically, equity investments have outperformed those with bonds in long-term scenarios. A study showed that a 75% stock and 25% bond mix could yield an average return of 7.3% over 20 years, while an all-stock portfolio could return approximately 8.7% annually. This difference can significantly impact savings growth over time.

Importance of Staying the Course

Many financial experts advocate maintaining a consistent allocation based on individual circumstances rather than making impulsive changes due to market fluctuations. A common guideline suggests subtracting one’s age from 110 to determine the appropriate percentage of stocks in a portfolio. For instance, a 40-year-old would thus hold 70% in stocks and 30% in bonds. However, this conventional strategy may not align with the needs of younger investors with decades until retirement.

Emotional Factors in Investing

It’s crucial to note that investing is not just a numbers game. The emotional aspect can create anxiety, especially with significant market movements. Strategies involving all-equity investments like XEQT may not suit individuals who require liquidity within the next seven years.

• Investors should focus on their own financial situation rather than external market events.
• Making investment decisions based on market timing often leads to unfavorable outcomes.

In summary, for long-term investors, maintaining an all-equity portfolio with options like XEQT provides a path for potential growth despite short-term fears. It’s essential to remain focused on individual investment goals and resist the urge to react to market fluctuations.