Understanding drawdowns: staying invested through the dips
If you knew your portfolio could fall 10% or more this year, would you still invest?
History suggests many patient investors would say “yes”, because short-term drops often recover, and the long-term trend can still be positive.
Why staying invested can pay off
A drawdown is a drop in the value of an investment from its recent peak. These dips can happen for many reasons, economic news, political events, or shifts in investor mood. Sometimes they appear suddenly, sometimes they build gradually.
Markets don’t move in a straight line. They naturally go through ups and downs, what professionals call Volatility. This simply means prices rise and fall over time, sometimes by a little, sometimes by a lot.
