Sunday People

Talk Money time to Want certainty? Play a long game

Trust market to do its job and never rush or panic


Getting ahead financiall­y means making some smart money decisions. Here is a key snapshot of the money informatio­n you need to know…

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10yr (%) 13.96 4.83

With ongoing concerns about high inflation, war, terrorism and the costof-living crisis, it’s only natural to wonder what effect these events will have on us in the long-term.

But when it comes to investing, these challenges don’t have to be a reason to panic. Cast your mind back 25 years to 1998…

■ The £2 coin was introduced.

■ Good Friday Agreement was signed.

■ Tony Blair was the Prime Minister.

■ The first Ford Focus went on sale.

■ The internet was in its infancy.

■ Y2K was looming.

■ There were fears about the Russian financial crisis.

If a stranger offered to tell you what was going to happen over the course of the next 25 years, would you invest in the stock market knowing the following events were going to happen? And could you stay invested? We are talking about...

■ Asian contagion.

■ Russian default.

■ Tech collapse.

■ The 9/11 attacks.

■ Stocks’ “lost decade”.

■ The Great Recession.

■ The global Covid pandemic.

■ Second Russian default.

■ The invasion of Ukraine.

Based on everything I just mentioned, what would you have done? Got into the market or got out? Increased your equity holdings or decreased them?

Well, let’s look at what happened. From 1997 to now, the world stock market returned, on average, 10% a year. This means that, in short, £1 invested at the beginning of the period would be worth over £6 now.

These returns are very much in line with what returns have been over the history of the stock market.

How can that be? Because the market is doing its job. It’s science.

Who could have predicted the Covid pandemic?

Here are a few fun facts about the stock market…

The Amsterdam Stock Exchange, establishe­d in 1602, was the first in the world.

The most expensive stock in the world is Warren Buffett’s insurance company, Berkshire Hathaway, at over $510,840 (£406,322).

The largest company is Apple, valued at over $2.85trillion. September is generally the worst-performing month for the stock exchange.

More than 80% of the stock market is now automated.

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