Part 5/8:
Fears of escalating losses can lead to hasty decisions, primarily moving to cash. Vanguard’s data illustrates that doing so often results in underperformance:
74% likelihood of underperforming the market if invested in cash for six months.
90% likelihood of underperformance if remaining sidelined for 12 months.
Experience shows that investors who ride out market volatility typically fare better than those who react impulsively in fear. The Vanguard report underscores the resilience of balanced portfolios—those composed of both stocks and bonds—over varying timelines, reinforcing the likelihood of positive outcomes over three- to five-year periods.