What should you know?
We know that investment markets can fluctuate in the short term. This volatility can lead some investors to worry that they could lose money by investing in the stock market.
But what are the chances of a loss in the stock market?
The chart below shows the annualised returns of the stock market over 1-year, 5-year, and 15-year holding periods:
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- On average, the stock market produced a positive return in 3 out of every 4 years.
- Holding investments for a 5 year period improved chances of success to 87%.
- Over a 15-year holding period, returns were always positive.
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Why should you care?
As Warren Buffett said “Investing is simple, but not easy”.
Successful investing is not about picking hot stocks, gambling on the next big trend, chasing quick returns or trying to predict the exact moment when markets will move up or down.
History tells us that investing in a diversified portfolio of the world’s leading companies, and holding for the long term, is the reliable pathway to investment success.
A permanent loss from investing in the stock market is a purely human achievement and is ALWAYS a result of misguided investor behaviour.
All you require to be a successful investor is patience, and the discipline to resist making emotion-driven changes to your investments along the way.
