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Market volatility tests even experienced investors, tempting many to sell during downturns or chase gains after a rally. Major indexes regularly move through cycles of declines and rebounds as the global economy shifts. The temptation to react, whether that means chasing a hot streak or moving to cash during a downturn, has always been part of investing.
But real financial success rarely depends on luck or perfect timing. It comes from something far more reliable: patience.
Originally published: March 19, 2025
"The stock market is designed to transfer money from the active to the patient," is a line commonly attributed to Warren Buffett. His longtime business partner Charlie Munger put a similar idea more bluntly: "The big money is not in the buying and selling, but in the waiting."
According to J.P. Morgan Private Bank, citing J.P. Morgan Asset Management's Guide to the Markets, an investor who stayed fully invested in the S&P 500 over the 20-year period ending February 2025 earned an annualized return of 10.60%. An investor who missed just the 10 best trading days over that same 20 years saw their annualized return fall to 6.37%. Missing the 20 best days dropped the annualized return to 3.69%, and missing the 30 best days brought it down to just 1.53%, barely ahead of inflation.
The reason the gap is so large is that the market's best days tend to cluster close to its worst ones. In fact, seven of the 10 best trading days over that same 20-year period occurred within 15 days of the 10 worst days. Investors who move to cash during a downturn risk missing the recovery that follows soon after. Timing an exit and a re-entry correctly is a difficult bet to make consistently, even for professional investors.
Ray Dalio, founder of Bridgewater Associates, one of the world's largest hedge funds, has written about what he calls "timeless and universal truths" in investing. Chief among them: markets move in cycles, and what matters most is how a portfolio behaves across a full cycle, not during any single day or week.
Jack Bogle, founder of Vanguard and a pioneer of low-cost index investing, made a similar point in his book Common Sense on Mutual Funds: "Time is your friend, impulse is your enemy." Investors who stay invested through market cycles, adding consistently through both downturns and rallies, have historically built far more wealth than those who try to predict short-term market movements.
Staying invested through market cycles addresses one risk: the temptation to time the market. But retirement introduces a second, related risk that a buy-and-hold strategy doesn't solve on its own, not knowing how many years or decades that money will need to last. This is sometimes called sequence of returns risk: the risk that a market downturn early in retirement, right as withdrawals begin, can permanently reduce how long savings last, even when the long-term average return looks strong on paper.
The Savvly Longevity Benefit is designed to deliver scheduled income at later-life milestones for investors who reach them. It adds a longevity-based reallocation layer to market-linked performance, adding scheduled payouts at ages 80, 85, 90, and 95 for investors who reach those milestones. Savvly is not insurance and not FDIC insured; payout amounts are not guaranteed. Learn more at savvly.com/disclosures.
Does missing the market's best days really hurt long-term returns that much?
Yes. According to J.P. Morgan, an investor who missed just the 10 best trading days in the S&P 500 over the 20 years ending February 2025 saw their annualized return fall from 10.60% to 6.37%, roughly half.
Why do the market's best and worst days tend to happen close together?
J.P. Morgan's analysis found that seven of the 10 best trading days over the last 20 years occurred within 15 days of the 10 worst days. Investors who exit during a downturn risk missing the rebound that follows.
What is sequence of returns risk?
It's the risk that the order and timing of investment gains and losses, particularly a downturn early in retirement, can affect how long savings last, even when the long-term average return is favorable.
This article is for informational purposes only and does not constitute financial, tax, or investment advice. Consult a qualified financial professional before making retirement planning decisions.
Disclosures
The information on this page is provided for educational purposes only and is not intended as investment, legal, or tax advice. It is designed solely to illustrate how longevity-linked investment benefits may work under certain assumptions. Actual results will vary. All illustrations, examples, and case studies are hypothetical and are intended to demonstrate potential scenarios — not to predict or guarantee actual outcomes. They do not represent the performance of any individual investor, portfolio, or account.
Key Assumptions Used in the Illustrations
Life expectancy and mortality projections are based on the most recent Social Security Administration (SSA) tables available at the time of simulation.
In the event of death or early withdrawal, hypothetical scenarios assume that investors who exit early, or their estate in the event of death, may receive 75% of the lesser of the initial investment or current market value, plus 1% for each full year the account was active. Case studies assume standardized market growth of 8% annually and do not incorporate unexpected market volatility, inflation, changes in interest rates, or changes in an investor's personal circumstances.
Simulations may assume a 3% annual early withdrawal rate prior to payout or death. All figures shown are net of fees. No forecast, projection, or hypothetical return should be relied upon as a promise or representation of future performance.
Past performance is not indicative of future results. The 8% annual market growth rate used in illustrations is a standardized assumption for modeling purposes only and does not represent the historical or expected performance of any specific investment. Note that early or voluntary withdrawals by other participants can affect fund performance and the size of distributions, and that a higher-than-expected number of participants reaching payout milestones may reduce the per-participant benefit received.
The Savvly Longevity Benefit is not a bank product, not FDIC insured, not insured by any federal government agency, and not insurance; payout amounts are not guaranteed. Investment values may decline..
The Savvly Longevity Benefit may not be suitable for all investors. Eligibility to invest is subject to qualification requirements and not all investors will be eligible. Investors should carefully consider their investment objectives, risk tolerance, time horizon, and financial situation before investing. See savvly.com/disclosures for current eligibility criteria, fees, risks, withdrawal terms, and fund assumptions.
This content is published by Savvly, Inc. Savvly has a financial interest in the products described and this content should not be interpreted as independent financial research or analysis. Investors should carefully evaluate their own circumstances and consult a qualified financial professional before making any investment decision.
