A new white paper from Principal Funds, Working to Rebuild Assets: Keys to Managing Risk and Volatility, provides suggestions for financial professionals to help investors visualize their rebuilding process based on the experience of investors in previous bear market recoveries. It also offers approaches to demonstrate various concepts of investing.

"Financial professionals have an enormous opportunity to help clients emerge from a state of fear and panic to one of perspective and rebuilding," said Tim Hill, Principal Funds national sales director. "The historical data within the paper seeks to illustrate the importance that asset allocation and diversification play in managing a successful portfolio."

According to the paper, the speed of recovery to previous account balances depends on the interaction of the following factors:

Account size: the investor's total mutual fund balances at the stock market's high point (roughly Jan. 1, 2008)

New money: the existence and amount of new money being invested and the need to put money to work rather than allowing it to pile up on the sidelines

Asset allocation: the asset allocation and future investment returns of the investor's mutual fund investments

The paper includes simple charts on how historic market declines have been followed by periods of sustained growth, the math of dollar-cost averaging and the costly mistake of buying high and selling low.

"It's important to note that the message goes beyond rebuilding. It's also about perspective," Hill said. "There is a natural flow to investing; markets experience ups and downs.