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.