Time in the markets [Charticle]
The chart above is a good reminder that staying invested for the long term will deliver capital growth. The more risk you take, the higher the return. Panic selling in times of volatility (such as early 2020) can result in investors missing subsequent growth. It is clear that growing capital over the long term requires patience and perseverance.
The picture also shows us how asset classes can deliver extended periods of benign performance. Take the US equity index, the S&P 500. After 13 years of investing in it, you would have doubled your money (partly given rand currency performance). After 20 years, your R100 investment is now close to R1 000. We cannot time the markets, but we can spend time in the markets.
Having learnt these lessons, the question is, where do we invest for the next 20 years? Be mindful that the road ahead may look very different for many reasons. A pandemic has reshaped policymakers’ thinking, consumer behaviour and corporate resilience. Behaviours are also shifting as people aim to protect the longevity of our planet and its people. Technology continues to change how we work and live. So take time to consider your financial goals and needs. Most importantly, if you haven’t invested for the future, the best time is now!