Why most of us are decade long investors
I recently wrote an article that I received a little bit of criticism for. The article The reality of investing and why sometimes the best action you can take is nothing contained an image taken from the New York Times published when the markets had their most recent downturn. The image showed how share markets have grown in the past 30 – 40 years through all of the most recent economic downturns and continued to deliver decent value.
However the criticism, not from a client or one of my close professional connections but from someone I didn’t know, was that no-one ‘invests’ for Thirty to Forty years. It’s actually a fair critique but one that’s misguided for many of us…
You see if we have any asset (be it a property, or a portfolio of shares, or funds in a pension, or ISA’s or something else) designed to provide both growth and income in the last third of our lives it’s likely that we’re going to be keeping those particular assets for decades not years. Consider this…
If you’re a 55 year old woman today in the UK you’ve got another 33 years on average left to live (according to the amazing ONS ‘how long does my pension need to last’ tool –
This means that unless your wealth sits in cash all of this time (with inflation eroding the real value of the money) and you’ve got some of your assets held in pensions or property designed to help you achieve your longer term goals you certainly will be invested for decades not years.
Where you invest, and how you slowly use the money over those decades to ensure it lasts for as long as possible, depends on a wide range of factors and certainly that’s part of our role as your financial planner (or the role of A financial planner – in the blog) – to support you to achieve this goal and to provide you with a service designed to help you to ultimately achieve one thing…
To live the life you want using the money as a tool to do this.
However the idea of looking at investing in this way is it provides a sense of perspective.
What’s happened in 2020 has been strange for many of us and we’ve certainly seen a downturn in equity markets (together with the subsequent recovery). However the reality is that if we’re going to be investing for decades all of the evidence points to the fact that the longer time period you look over the more perspective we get on short term ups and downs and the more we realise how little these bumps matter when viewed differently.
All we need to do is maintain that sense of perspective…and realise that investing to achieve your financial plan is a game you’re likely to play for decades not years.
If you feel that we can help you with your plan or know someone who could do with some support, we would love to chat.
Get in touch at cassiedaems@cervellofp.co.uk or call 01708 606 202
