making better investment decisions
Investment markets have been especially volatile for investors this year.
In these uncertain times it may be difficult to remain committed to your investment plan.
This is why we at Nelson Life we believe you should think longer-term. If you are invested then you should have an investment timescale of 7 years plus.
Ideally, you should consider investing for a period of 10 years (the percentage of rolling periods which produce a negative return reduces from 21% over 5 years to 12% over 10 years).
Or a better way of looking at this is that the potential positive returns over 5 years happened 79% of the time and increases to 88% of the time between 1927 to 2020.
With historically low deposit rates these are compelling reasons to consider equities (shares) for the longer-term.
History has shown us that equities have recovered and consistently delivered long-term gains for investors (please see chart above).
The average return over a 10 year period is +122.3% (NB average negative returns is -24.98%, however, remember this has only happened less than 12% of times)
The longer you invest for and the more money you have invested in ‘growth assets’ will increase your potential rewards.
If you are funding or a longer-term investment goal such as your pension – then this is a must.
invest into a fund that suits your attitude to risk
there are ways to optimise the ‘risk-return trade-off’ and we are available to discuss this with you.
By combining equities with bonds, alternatives, cash you have the opportunity to enhance the way risk is controlled within your portfolio over time.
Equity markets are expected to remain volatile for sometime. Prepare for the ups and the downs (potential significant!)and hold in for the longer-term.
The longer you are prepared to invest the better your expected outcome will be.
Understand the risk profile of the fund you are investing in, understand your own risk preference and also, importantly ensure that you have the capacity for loss (and remain invested). Making sure you have emergency monies set a side is a vital part of financial planning.
If you have a financial planning or product question please contact us 091441188
This article was written by Rory Nelson, founder of Nelson Life. Rory is celebrating 20 years in financial planning this year. Professional qualifications include; UCD Specialist Diploma in Wealth Management, Pension Trustee Practitioner PTP, UCD Professional Certificate in Stockbroking, UCD Professional Certificate in Asset Management (SIA), QFA FLIA, Pensions Diploma, Mortgage Advice Diploma, CFP module – Tax & Estate Planning and has a degree in BA Accounting & Finance. He has regularly participated in national financial press.
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WARNING: Past performance is not a reliable guide to future performance.WARNING: The value of your investment may go down as well as up.WARNING: You may lose some or all of the money you invest.WARNING: These funds may be affected by changes in currency exchange rates.WARNING: If you invest into this product you will not have access until you retire.WARNING: The above content does not constitute investment advice, as it does not take into account the investment objectives, knowledge and experience of financial situation of any particular person. Prospective investors are advised to make their own assessment of the information contained herein and to obtain professional advice suitable to their own individual circumstances.WARNING: The information contained in this document is based on our understanding of current tax legislation and the current Revenue Commissioners interpretation thereof and is subject to change including retrospectively without notice. This is intended as a general guide only and is not a substitute for professional tax, legal and investment advice.
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