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Is your investment timescale long enough?

Written by: Adam Lewis
Retail investors need to rethink their definition of long-term investing, research reveals.
A study by HSBC Global Asset Management found thatIs nearly half of investors perceive investing ‘long-term’ as being between five and 10 years.

HSBC GAM commissioned the research to assess the attitude of investors of what ‘long term’ really means to them. Just under 50% of those surveyed said five-to-10 years, fewer than 10% said over 20 years, while over 10% said three-to-five years.

Dan Rudd, head of wholesale, UK, at HSBC GAM, said while it is “heartening” that many perceive long-term investing to be over five years, the survey’s findings still raise concerns.

“We believe that as investors look towards enjoying increasingly lengthy periods of retirement, they may need to adopt a much longer definition of ‘long-term’ when it comes to their investments,” he said.

“There’s been a real generational shift in how people save for their retirement from final salary schemes to Defined Contribution, and it’s clear that people will need to stay in the market for longer as they build up their retirement savings pot. This means being prepared to ‘ride out’ periods of underperformance.

“Investors are naturally keen to review their portfolios to ensure that they perform for them, especially in light of historically low interest rates, but there’s a risk that investors who focus on shorter term performance cash out of the market entirely or churn their portfolios, which increases their overall trading cost.

“What makes a difference to investors is being prepared to look beyond temporary markets dips, taking a long term view, and preparing to be patient.”

HSBC GAM said they will run this survey periodically in order to track changing attitudes to this topic over time.

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