INVESTING ESSENTIALS
Knowing your risk tolerance and investing goals is a first step in developing a long-term investing strategy.
Making regular contributions to your investments helps investors avoid the challenges of timing the market.
When it comes to determining your investing strategy for future years—or even decades—the planning process may feel overwhelming. Questions like “Where are the markets heading?” or “Is my mutual fund diversified enough?” are common. Learn how these long-term investment strategies may help you achieve your investing goals.
Before developing an investment strategy, it’s important to establish what financial goals you want to achieve. For example, do you need to save for a shorter-term expense like a wedding in a few years, or something that lasts several years, like retirement? Knowing when you need your investments can help you choose the appropriate strategy, especially when it comes to liquidity and risk. (See Investing for short-term goals.)
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Choosing a well-diversified portfolio that suits your individual risk tolerance based on your plan can help when investing long term. With a mutual fund, you purchase shares of a fund invested in multiple stocks, bonds and other securities, reducing the exposure investors may take on when owning individual stocks tied to only one company’s performance. Thrivent Asset Management offers actively managed mutual funds that are diversified for a variety of risk tolerances, which means you can select a fund that aligns with your investing style and goals. Take the investing style quiz to learn what types of funds may suit your needs.
Dollar cost averaging1 is the term used to define investing at regular intervals with the same amount of money each time. It is an easy technique to set up with automated investments. Simply purchase the same dollar amount ($100 in the example below) in your mutual fund account every month or quarter. The cost of the shares may be higher one month and lower another month, but over time the intent is for you to benefit from an average purchase price. Purchasing at intervals reduces the risk of investing a large amount all at once when the cost of shares may be high.
| Month | Investment | Cost per unit | Total units purchased |
|---|---|---|---|
| Month | Investment | Cost per unit | Total units purchased |
| May | $100 | $1.00 | 100 |
| June | $100 | $0.95 | 105 |
| July | $100 | $0.85 | 118 |
| August | $100 | $1.05 | 95 |
| 4-month total | $400 | $0.96 | 418 |
Hypothetical example is for illustrative purposes only.
Historically, it has paid to stay invested through market ups and downs: the stock market has trended upward over the long haul, and it is notoriously difficult to predict when the market is going to shift. The financial crisis of 2008 saw the S&P 500® Index—a market-cap-weighted index that represents the average performance of a group of 500 large-capitalization stocks—plummet to a low of 676.53 on March 9, 2009. It then rebounded over 200% to 2043.92 by December 31, 2015. Staying invested through a drop in the market may allow you to reap the benefits of a subsequent rebound. A drop in the market only costs money if you sell and lose money on your investment. Following that with the potential of missing the best days to be in the market, trying to time the market can significantly impact long-term performance over time.
While you can’t invest directly in an index and this performance does not include the typical costs of investing, the following chart shows the growth of $10,000 from 2010 through the end of 2024 if you could have invested it in the S&P 500 Index. The lower half of the chart shows annualized returns if you had invested in the S&P 500 Index in 2010 and never sold, if you had missed the 10 best days, the 25 best days or the 50 best days:
Sources: Standard & Poor’s; Thrivent, Feb. 21, 2025; National Bureau of Economic Research
Sources: Standard & Poor’s; Thrivent, Feb. 21, 2025; National Bureau of Economic Research
Mutual funds may periodically pay dividends and capital gains. If you set up your account so these payments automatically reinvest, you’ll purchase additional mutual fund shares and build your holdings without having to add more cash to your account. Similar to dollar cost averaging, reinvesting dividends and capital gains can occur automatically at regular intervals.
That initial investing plan you developed may change over time. It could be because of a lifestyle change like marriage, birth of a child or death in the family, or an investing personality change like you want to adjust your risk tolerance. It’s a good practice to review your overall investing strategy yearly to make small balancing adjustments, but also to confirm that the strategy is meeting your current financial goals.
Past performance is not necessarily indicative of future results.
1Dollar cost averaging does not ensure a profit, nor does it protect against losses in a declining market. Because dollar cost averaging involves continuous investing, investors should consider their long-term ability to continue to make purchases through periods of low price levels. While diversification can help reduce market risk, it does not eliminate it. Diversification does not assure a profit or protect against loss in a declining market.
