Investors have history on their side

Investors have history on their side

If you need some reassurance where money and savings are concerned, it’s always comforting to know that investors have history on their side.

Most of 2020 has been challenging for investors. There have been so many factors causing uncertainty. That manifests itself as volatility, something no investor wants to see.

However, market ups and downs are nothing new. Any investment involves some form of risk, and stocks and shares will always have risks associated with them.

The key is to know what you want from investments and be prepared to take a broad, long term view of how markets will perform.

After all, economies can change quickly. Just look at the coronavirus pandemic, the US-China trade disputes, Brexit and more.   

Black Monday     

Back in 1984, the FTSE 100 as we know it was launched. The starting point was 1000 points, based on the largest 100 qualifying UK companies.

Within a few years the index had double to 2000 points. Investors were very happy at the steady and strong returns.

Then Black Monday hit. It followed one of the worst storms in UK history, but the lashing wind and rain was nothing compared to the damage inflicted on global stock markets.

The weather wasn’t responsible for the stock falls, rather the new and increased volumes of electronic trading that saw huge numbers of shares sold off within a very short period.

Back then, investors held their heads in their hands. It was an awful time. There were daily double-digit losses as the value of companies fell.

For several years, things did not quickly improve. A recession in the early 1990s saw markets stutter back to life.  

Just like the current situation, a double-whammy of Covid and Brexit, there were severe challenges.

However, by the late 1990s, after a dramatic switch from a Conservative to a Labour government, the FTSE grew considerably.

By the turn of the century, it was positioned at nearly 7,000 points.

Investors who had looked to the long term and stayed invested were rewarded.  

No short-term certainties   

Something any good independent financial adviser will tell you is that there is no such thing as a short-term certainty.

Sure, stocks can rise quickly. A new product, a growing goods market, trends, or the addition of new technology can drive the value of companies as they become stronger and more competitive.

Dividends might be awarded and the rise in share price will leave investors smiling.

However, only fools will believe that such situations will last forever. So many factors can see firms stall, and therefore the value of a company can fall. 

Markets grow over time

Since Black Monday there have been numerous market fluctuations. Some have been much worse than others.

The latest “crisis” hit global shares in March of this year. There were dramatic corrections and some people rushed to make hasty decisions and sell stocks.  

Investors who spoke with independent advisers will have been encouraged to think carefully. They will have assessed their position and looked at their long-term goals.

While that can be tough, really testing patience and confidence, once again the markets have shown that they adapt and bounce back.

Just a few months after the low points of 2020, many stocks have returned to the levels seen in January and February.

Brexit, the US election and how quickly a Covid-19 vaccine is found will all influence thinking and confidence over the coming months.

However, it’s clear to investors that history is already repeating itself and share values are holding their own once again.   

Understand what you want from the long term

Logic Wealth Planning has advised clients long enough to know that it is important to fully understand what someone wants from their investments.

It’s not just about the “now”, or in five years, but ten and twenty years down the line when retirement is a reality and even care fees need to be considered.

We aim to put you at ease so that you can make the best decisions for your circumstances.

Please call us on 0808 1234 321 or email to start the discussion about how best to start enjoying income during retirement.

Please be aware the value of investments or income from them can fall as well as rise. We are here to help you make informed decisions as you put important things in place for you and your family.

* Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.