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Experienced Investor

Staying invested over the long-term: the proof it pays off

Paloma Kubiak
Written By:
Paloma Kubiak

The shaky start to the year for global markets has unnerved investors but the overarching message from the experts is: don’t panic and stay invested.

This goes back to the old adage of time in the market being more important than timing the market.

The experts at AXA Self Investor have crunched the numbers and revealed that staying invested over the long-term does in fact pay-off.

They assessed the 10 year performance of the FTSE 100, on a rolling monthly basis since February 1996, and found that over the 10 year period there were just six out of 120 occasions where investors would have lost money.

This means that investing long term – in this case 10 years – generated a positive return 95% of the time.

Over the same rolling decade period, the average return for the FTSE 100 was 69.57%. The largest 10 year return was 154%, while the biggest loss was 14.5%.

The research found the only losers were those investors who bought during the dotcom boom (31 January to 30 June 1999) and subsequently sold at the lowest point in the financial crisis (31 January to 30 June 2009).

Three tips for successful long-term investing

Adrian Lowcock, head of investing at AXA Self Investor, offers three top tips for successful long-term investing:

Stay calm – Only make investment decisions when you are calm and rationale. Mistakes are often made in the heat of the moment and when our attitude and tolerance for risk is low.

Remember your goals – Remind yourself what you are investing for, whether it is retirement or a dream holiday. When will you need the money, is it in the next couple of years or not for the next few decades.

Become a contrarian – Be greedy when others are fearful. When everyone is selling think about doing your annual ISA or SIPP allowance, buying funds that you want to hold for the long term.