Investing is not short term
Investing is not for the short term – as discussed in Principle 1.
To beat inflation investors need to invest their money where, over time, it will have a good chance of real returns i.e. returns above inflation in assets such as Shares, Property, Bonds, or Commodities like Gold.
The Brunswick Investment Solution gives investors convenient access to these and many other attractive assets not always available to private investors or even large investment companies. However real assets fluctuate in value. This means that investing in them should only be considered for a minimum of 5 years.
If an investor can be flexible about when they want to withdraw cash then the chart below shows that staying invested could be a sensible choice, in spite of possible market falls.
Understandably, investors may seek to reduce losses by moving into cash during periods when investment markets are experiencing high volatility. A further risk is trying to time when to re-enter investment markets.
The chart below shows the effect missing some of the best days in terms of market performance had on £10,000 invested for 25 years.
We see that the investor who is well advised and has the appropriate amount of cash reserve will benefit from staying invested even during periods of fluctuation.