Portfolio ponderings – keep one eye on the horizon
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Portfolio ponderings – keep one eye on the horizon
As economic challenges endure, it’s good to maintain the mindset with your investments, it’s ‘time in the market, not timing the market’ that really matters. Research* has explored the concept and the numbers make some compelling reading.
In the midst of the dot-com boom (March 2000), if someone invested £1,000 in the average investment company** and reinvested the dividends, the original investment would have been worth £3,665 as at 6 April 2020, a 267% return. The 20-year period includes the dot-com crash, the global financial crisis and COVID-19 related market falls.
The Association of Investment Companies’ Annabel Brodie-Smith reflected on these findings: “The bursting of the tech bubble and the global financial crisis saw huge falls in markets… However, investors who were able to stay invested or even invest during the downturn would have been richly rewarded over the long term. No one has a crystal ball, but these returns show the power of long-term investment and why it can often pay to have one eye on your portfolio and the other on the horizon.”
*AIC, April 2020
**‘Investment company’ includes investment trusts and other closed-ended investment companies but excludes venture capital trusts and 3i Group plc.
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
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