The Best Investment Strategies - Time in the Market, NOT timing the market

When is the best time to invest?

No-one has a crystal ball and should any financial adviser suggest they know what the future holds, treat with caution!

However, what we can do is look at 100 years of market history to inform us and whilst past performance is not indicative of future performance, taking a long term historical view at least gives us some perspective.

We can see from the graphic below that equities (shares on the stock markets) move forward (upwards) roughly 75% of the time:

We know that stock markets are volatile and that this can cause anxiety when investing, however when we look at history, those years with significant growth had periods where the markets FELL substantially, before recovering to show a gain over the period.

What about Market Timing?

So, we know that markets generally go up over time, and we know that markets are volatile, therefore it is easy to think that we should simply get out of the market at the top, wait until the market falls, before then investing our money back in again.

This is great in theory, however this can be a dangerous game to play.

This is because we dont know exactly when the high and low points will be and added to this, history also tells us that often, the largest growth days, can immediately follow the lowest point.

If we don't quite get the timing right, and we don't jump back into the market at the lowest point, we risk missing out on some vital days of growth.

Whilst missing out on a few days might not appear to be hugely problematic, the graphic below shows that missing just a few of the best days over a 20 year period can actually have a huge impact on your returns:

The answer? - Time in the market, not timing the market.

Therefore, the evidence seems to suggest that, over the long term, the stock market will rise and so the key factor of success is staying invested for as long as possible.

The markets by their very nature are volatile, however the key message is not to panic during the temporary market declines, keep your faith in the markets, and remain invested over the longer term.

If you do, the likelihood is that you will be rewarded and the below graphic provides a clear demonstration of the impact of a long-term investment strategy and the power of compounded returns.

How We Can Help

Initially by listening to your goals and aspirations and how you picture the rest of your life.

Once we have gathered the required basic information from you, we will set to work;

• Collating all the wider information, assessing the suitability and costs of any existing investments, and carrying out the required calculations in order to put together your bespoke plan to help you achieve your goals

• Produce a detailed cash-flow model following an in-depth analysis of your income and expenses which will clearly visualise your financial journey towards your goals.  

• Implement the plan

• Once in place, we will monitor your investments and ensure everything is operating in line with your goals and objectives

• Our periodic reviews allow us to assess any changes to your circumstances or goals, as well as any market or legislative updates, and then to adjust the financial plan accordingly.

• Critically be flexible enough to respond to the changes and challenges that life throws our way

Financial Adviser Cheshire and Pension Adviser Chester

XV Wealth are an Independent Financial Adviser based in Chester, Cheshire.

About us: XV Wealth is an independent financial advisor based in Chester. As an independent financial adviser, we can provide independent and unbiased financial advice. We provide independent financial advice, pension advice, investment advice, inheritance tax planning and insurance advice. If you want to speak to a Financial Advisor, we offer an Initial Financial Consultation without cost or commitment. Meetings are held either at our offices, by video or by telephone. Our telephone number is 01244 62 88 71. XV Wealth Financial Advisers email is info@xvwealth.co.uk.

This is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.

The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Past performance is not a guide to what might happen in the future.