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Investing for 10 years generated a positive return 98% of the time

Posted by Adrian Lowcock in Press releases category on 21 May 19

  • The FTSE 100 has given an average total return of 139.36% over 10-year periods
  • Three tips to becoming a long term investor include staying calm, remembering goals and adopting contrarian approach
New analysis from Willis Owen reveals that remaining invested for 10 years generates a positive return 98% of the time for UK investors.  

The investment platform looked at the total return of the FTSE 100 over 10 years on a rolling monthly basis since January 1986. Over this period, there were just six 10 year rolling periods when investors would have lost money out of a possible 281 10-year investment terms. This was on 6 consecutive periods from 31st January 1999 to 31st January 2009 through to 30th June 1999 to 30th June 2009.  Essentially, investors would have made money in every 10-year rolling period but for the dotcom bubble and the Global Financial Crisis: buying around the peak of the former and selling during the nadir caused by the latter would have caused the six loss-making periods. Only if you had bought during the peak of the dotcom bubble and subsequently sold at the height of the financial crisis would you have lost money over a 10 year period since 1986.

The analysis shows that investors received a positive return 88% of the time if they invested for five years. 

The FTSE 100 gave an average total return of 139.3% 

Over the same rolling 10-year periods, the average return for the FTSE 100 was 139.36%. 

The largest 10-year return was 433% and the biggest loss was 14.5%.  

Adrian Lowcock, head of personal investing at Willis Owen, said:

“In the short-term, markets can be extremely volatile as they are driven by news and buffeted by swings in sentiment as investors place an over importance on the pervading headlines.

“However, the analysis clearly demonstrates that time in the market is more important than timing the market. Investing for the long-term is the wisest course of action and as we have seen this month, markets can be volatile in the short-term.

“Only if you had bought during the height of the dotcom bubble and subsequently sold at the lowest points of the financial crisis 10 years later you would have lost money. This fact highlights the importance of staying calm and not selling after markets have fallen.” 

Three tips for successful long term investing

Stay calm: Only make investment decisions when you are calm and rationale. Mistakes are often made in the heat of the moment and when our attitude and tolerance for risk is low.

Remember your goals; Remind yourself what you are investing for, whether it is retirement or a dream holiday. When will you need the money? Will it be in the next couple of years, or not for the next few decades?

Become a contrarian:  Be greedy when others are fearful. When everyone is selling think about doing your annual ISA or SIPP allowance, buying funds that you want to hold for the long term.