Ten Facts Clients Need to Know to Achieve Investment Success

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This article is not meant for advisors. It’s for you to share with your clients.

You can build the best portfolio for your clients, but if they don’t stay invested, their chances of reaching their goals will be diminished.

I’ve observed that clients usually abandon their portfolios because they were not properly prepared for the experience of investing. They don’t understand the fundamentals and have unrealistic expectations.

I want to share some facts that will help address this problem. You may already have shared these facts with your clients. But by discussing them clearly together you will reinforce these messages and help your clients achieve investment success.

Clients do not need to become investment experts. But they do need to know how to behave as successful investors in order to achieve their goals. Understanding these 10 facts will help them on their journey to a secure financial future.

1. Over time, the stock market goes up

From 1950 through 2019, the stock market rose on 53.7% of the trading days. On average, it rises a little more on the up days than it declines on the down days. This pattern has produced a distinctively upward trend over the long-term.

Growth of the US Stock Market

U.S. stock market as represented by the Ibbotson SBBI US Large Stock index. Growth is shown on a logarithmic scale to more clearly highlight growth through history. Data Source: Morningstar.

This is not a coincidence. It reflects the fact that, on average, the earnings of the companies whose shares are traded on the market rise over time. If the humans at those companies are motivated and allowed to grow their businesses, the market will continue its upward trend.