Reflecting on the markets and what the future may bring

If all you read were financial news headlines in 2021, you might believe that the markets were quite the rollercoaster ride, impacted by COVID flare-ups and variants, inflationary fears and political events. Here’s the truth: over the past 12 months, the true story of the markets has remained unchanged – it’s been a story of strong and near-constant economic growth with only intermittent interruptions.?

The bottom line is this: people who invested generally in the stock market this year and stuck with it saw double-digit portfolio growth . Even better, those impressive results are not confined to this year alone. In fact, if you stayed invested the past five years, you were handsomely rewarded. Since 2016, money invested generally in the Dow Jones Industrial Average grew by more than 80% , investments in the S&P 500 have doubled , while the NASDAQ exchange grew almost 200% . And if you invested in the S&P 500 fifty years ago, your investments would have grown by almost 20,000% .??

On the other hand, everyone who read those sometimes-sensational headlines and feared the worst about the markets over the years has missed out on incredible opportunities to build their wealth and prosper. As I reflect on 2021, I’m very proud of the wealth management advisors and teams across the country who helped clients address their financial fears, resolve their concerns and remain steadfast. Their actions yielded strong results and certainly changed people’s lives.?

At Northwestern Mutual, I observe time and time again how sincerely and uniquely resolved our financial advisors are in urging their clients to stay the course. They are staunch advocates for focusing on the long-term, sticking to the plans and avoiding fear-based decisions, even as the financial media and “experts” from other firms are breathless on TV describing each downturn as potential Armageddon. Contrary to what one might assume, I believe our advisors are willing to take on more risk in pursuit of greater rewards for their clients because their clients are so well-protected from other risks in life. It’s another strong example of Northwestern Mutual’s distinctive “protect and prosper” strategy – one that combines insurance and investments to produce better outcomes for our clients. This powerful combination enables clients to enjoy their lives today with the comfort that comes from knowing they can prosper in retirement and fulfill their legacy wishes. From experience, our advisors know that if you plan comprehensively, for both the good times and the bad times, you can actually dream bigger.?

What is my advice for the future??

As I look ahead to 2022, my best advice is to stay invested in alignment with your goals and plan comprehensively. Plus, be ready to wade through the stream of inevitable headlines that could shake your focus – and recognize there are compelling reasons to believe the markets still have room to run. More Americans are returning to the labor force . The world’s economy is adapting to the pandemic new-normal. And if the impact of the pandemic softens, consumers are expected to spend more on services and less on goods – helping to ease today’s strain on the supply chain and reduce the impact of inflation in the process.?

If all of these scenarios come to pass, investors have sound reasons to feel confident about the days and months ahead. Of course, there will certainly be new winners and new losers. For example, consumers may choose to spend money on travel, gym memberships and concerts instead of home furniture and exercise equipment. But taken together, the fundamentals of the economy remain strong.?

No matter what economic ups and downs may be on the horizon, the tenets of sound investing and wealth management still remain the same:?

Solve your risk-based needs first. Seek out expert guidance to develop a long-term investment strategy and build a plan that’s consistent with your risk tolerance, time horizon and goals. Ensure that your portfolio is diversified and allocate your assets strategically. Resist the temptation to change your strategy during up or down markets.??

And perhaps most importantly, don’t be swayed by near-term fears. Start early and invest regularly. Best wishes to you in this holiday season.??