The power of intent

Financial markets can offer a great opportunity to grow wealth, but they can be volatile. That volatility can make investors uneasy—sometimes ushering in feelings of fear, or even excitement about potential opportunities. Reacting to market movements may sometimes seem like the right thing to do for the short term—but what are the long-term consequences?

For starters, volatility is a feature, not a bug, of investing. The S&P 500 has suffered an average intra-year pullback of -14% over the past four decades, with 14 of those 40 years seeing even steeper losses. Despite those selloffs, however, the index still managed to post a positive return in 31 of the 40 years. Consider 2020 a hyperbolic example of this dynamic. Before the COVID-19 pandemic, stocks were enjoying their longest bull market on record. Then, as the virus gripped the world by mid-March 2020, markets started to experience great volatility. In fact, the average daily move for the S&P 500 was +/- 5%, even higher than at the height of the stock market crash of 1929. During this period, U.S. stocks experienced one of the quickest declines into bear market territory in history, losing -34% in a little more than one month’s time. But the swiftness and severity of the selloff was matched only by the strength of the market’s recovery: Stocks climbed back to their pre-crisis highs in just four months, and ultimately ended the year more than +16% higher..¹

Many market participants have been tempted to jump in and out of investments during bouts of volatility. However, even before 2020’s unprecedented market moves, the historical evidence shows that markets right themselves even after major disruptions. What’s more, it illustrates the difficulty of trying to time the market; get that timing wrong, and the consequences are significant.

 Over the past 20 years, seven of the stock market’s 10 best days occurred within just 15 days of one of the market’s 10 worst days. If an investor missed those 10 best days because they were attempting to dodge the down days that surrounded them, their average annualized return amounted to +6.4%. But what if that same investor stayed invested throughout the entire period, taking the bad days with the good? Their annualized return was +10.6%— almost double that of the market timer.²

The point is that in the long term, staying invested is a tried-and true strategy for growing wealth over time.

Focus on yourself, not the markets

Research suggests that making decisions based on short-term market movements actually diminishes returns. Indeed, there is ample evidence from the field of behavioral finance finding people tend to react to markets in a way that lowers returns.³ Many investors tend to “buy high” and “sell low,” which can cause them to “churn and burn” their portfolios. In every recession since the 1950s, with the only exception being the tech bubble, we’ve seen the market bottom while the economic backdrop was still deteriorating. Not being invested for the first leg of the recovery meant often missing out on significant returns.⁴

So how can we avoid decisions that might lead to poor outcomes, and instead position ourselves for success? Reframing financial decision making is a crucial starting point. Rather than reactively focusing on elements that are out of our control—markets, economies, policymakers and the like—we can instead proactively focus on elements that we can control.

What is your money’s job?

There are a number of factors within your control, but perhaps the most critical component in every wealth strategy is this: explicitly identifying the primary purpose, or intent, for your money. In other words, what job do you want your money to do for you? When your decision-making process serves the primary intent for your wealth, you have a guidepost to understand what actions to take, given market (or other) events.

Imagine young entrepreneurs in their early 30s with no children. The couple wants to provide for their lifestyle after they sell their business. They have many working years ahead of them and no intention of using their investments for decades. For them, market volatility may be largely irrelevant. Why? They are more able to wait out ups and downs, ultimately taking advantage of potential investment returns over multiple decades.

Now imagine the same couple, but they are currently in their 60s. They have three adult children and no source of income outside of their investment portfolio. They not only need to sustain their spending, but also would like to provide for family members. In addition to revisiting their portfolio risk level, they may want to consider factors that go far beyond investment decision making.

For example, how long do they want the money they give to their family to last—within the children’s lifetimes or well beyond? Given these goals, what would be the most tax-efficient way to give to their family? Would they have enough to maintain their lifestyle, given their needs and desired level of giving? These considerations may necessitate a dialogue with professionals about wealth structuring, investing, borrowing, income and estate tax considerations—and more. Identifying a primary intent moves a focus on investments to the broader purpose of wealth, which can help you align your overall wealth strategy and decision making with the individual’s or family’s goals.

Taking an intent-driven approach 

To have your money work toward your goals, it helps to identify with one of four “foundational intents” for wealth.

SPEND: To support your lifestyle goals with the assumption that all wealth will be spent in your lifetime.

Spending all of your wealth during your lifetime can be by choice (e.g., “I’d like to bounce my last check”), or by necessity (e.g., “I feel that I may not have enough during my lifetime based on my current spending”).

People attracted to this approach are often interested in generating income to achieve a certain lifestyle, or educating children and/or grandchildren.

Many people believe this intent is the easiest to manage. However, there are many risks in attempting to achieve a zero balance sheet at the end of life; it’s easy to over- or underspend. Just think: Would you be comfortable using equity in your home now if you unexpectedly lived to 100?

These continuous risks make stress-testing and contingency planning essential.

DIVIDE: Identify a set amount of money either to create a minimum wealth level or to leave to beneficiaries.

Many people who focus on division are interested in “keeping it simple” with respect to the path their wealth will take at the end of life. Why? Some feel they want beneficiaries to have complete control over the money they receive, or it feels like too much effort to create a “trust and estate plan.” Others are reluctant to discuss their wealth or aren’t ready to commit to gifting to the future recipients. The key focal point is that the wealth goes to the intended place, and that the plan is reviewed on an annual basis—especially later in life when preservation can become more appealing. For example, when gifts become larger than anticipated, there may be a greater focus on sustaining the wealth for third and fourth generations. Also, it can be more apparent whether family members are psychologically ready to productively receive wealth and what governance may or may not be needed.

PRESERVE: To create a strategy and family culture that enable wealth to last through multiple generations.

The desire to preserve wealth across generations can be enormously complex. To support an estate plan that preserves your assets, it is essential to consider your family culture and dynamics.

Promoting a positive family culture to foster the stewardship of wealth may require answering challenging questions such as: When are trust distributions so large they risk stifling the beneficiary’s growth and development? The answer lies beyond just dollar amounts. It also depends on communicating with beneficiaries about financial values, accountability and governance.

The key to successfully preserving wealth often depends on how well you align a wealth strategy and structure with your family culture. It can be very helpful to have the ongoing advice and support of advisors familiar with successfully transferring wealth across generations.

GROW: To create a strategy and family culture that enable wealth to grow in perpetuity (often via a family business or pooled family investments).

Perhaps the most complex of the four intents, a growth intent requires multigenerational succession plans, as well as business and wealth strategies that are truly owned and governed collaboratively by family members. Even the best laid-out approach can end in very public and painful family disputes, making predefined exit strategies essential.

A key starting point can be to identify whether your family has the human infrastructure (i.e., family members who also have a desire to grow) to support this path for your wealth.

From awareness to action

Establishing a primary intent—whether it be Spend, Divide, Preserve or Grow—can empower you to reframe financial decision making. It can motivate you and your family to collaborate, and help your professional advisors work with you to answer such critical questions as:

Do I have just enough, more than enough or not enough to achieve my primary intent?

Establishing the resources available—now and in the future—to serve you or your family’s intent is critical. If there is not enough, working to adjust the necessary levels of cash flow can help get you back on track. If there is just enough, continual monitoring of the situation may be essential. If there is more than enough, perhaps you may want to explore additional goals or opportunities.

Who should be involved in the financial decision making, and when?

Establishing a group of decision makers and a culture that can support your desired intent is also important. For example, if family members don’t know they will be receiving large amounts of wealth, they may not have the information or tools to successfully steward the money or a family business across multiple generations. Working with professionals to communicate the right amount of information at the right time can help you or your family achieve the desired outcomes.

How we can help you

Your J.P. Morgan team can help you identify your intent-driven approach to wealth: building a strategy that supports your goals and addresses your concerns.

With regular check-ins, we can help keep you on track and aligned with your strategy. Remember to consult your legal, tax and other professional advisors for further guidance on how certain strategies should be applied to your situation.

¹FactSet, Standard & Poor’s, J.P. Morgan Asset Management—Guide to the Markets. Returns are based on price index only and do not include dividends. Intra-year drops refer to the largest market drops from a peak to a trough during the year. For illustrative purposes only. Returns shown are calendar year returns from 1980 to present year. Data as of January 31, 2025. It is not possible to invest directly in an index. Analysis is based on the J.P. Morgan Guide to the Markets—Principles for Successful Long-Term Investing. 

²J.P. Morgan Asset Management analysis using data from Morningstar Direct. Returns are based on the S&P 500 Total Return Index, an unmanaged, capitalization-weighted index that measures the performance of 500 large capitalization domestic stocks representing all major industries. Past performance is not indicative of future returns. An individual cannot invest directly in an index. Data as of January 31, 2025. Analysis is based on the J.P. Morgan Guide to Retirement.

³Brad Barber and Terrance Odean, Boys Will Be Boys, 2001.

⁴J.P. Morgan Asset Management analysis using data from FactSet, Bureau of Economic Analysis, Haver Analytics as of March 31, 2023.