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When it comes to investing… keep your emotions in check

When it comes to investing… keep your emotions in check. Emotions in an up or down market. Make decisions that will cost more money over the long term. Where’s the proof?. Investment return is far more dependent on investor behaviour than on fund performance.

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When it comes to investing… keep your emotions in check

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  1. When it comes to investing…keep your emotions in check

  2. Emotions in an up or down market • Make decisions that will cost more money over the long term

  3. Where’s the proof? • Investment return is far more dependent on investor behaviour than on fund performance. • Mutual fund investors who hold their investments are far more successful than those who time the market.1 1QAIB 2007, page 4: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

  4. What is market timing? • Predict future market directions • Make investment decision based on predictions • Goal is to buy low and sell high or to switch investments

  5. Emotions: An investor’s worst friend Investing behaviour is lead by two dominant emotions: • Greed • Investors pour cash into mutual funds as markets rise • Fear • Investors frantically sell after a market decline2 2QAIB 2007, page 5: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

  6. The proof is in the returns Can the average investor get better results than the market? Source: QAIB 2007, page 20: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

  7. Investors “guess right ratio” Source: QAIB 2007, page 9: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

  8. Best strategy for long term investors • Buy and hold high-quality mutual funds with a record of delivering strong risk-adjusted returns

  9. Asset allocation funds • Long term investors concerned about market volatility • Professionally managed • Makes decisions on your behalf • Portfolio to match your risk tolerance • Potential to achieve better results by staying invested

  10. Projected retention based on 20 years Source: QAIB 2007, page 10: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

  11. Work closely with your advisor • During periods of market volatility • Investment returns increase when emotional responses are replaced by disciplined investment behaviour

  12. Important notes The commentary in this presentation is for general information only and should not be considered investment or tax service to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. Manulife Investments is the brand name identifying the personal wealth management lines of business offered by Manulife Financial and its subsidiaries in Canada. As one of Canada’s largest integrated financial services providers, Manulife Investments offers a variety of products and services including: segregated funds, mutual funds, principal protected notes, annuities and guaranteed interest contracts. Manulife and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.

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