Fortune favours the long term

Timing the market is tough but it is widely accepted that the best time to invest is often the most uncomfortable. Many investors have been caught on the wrong side of big market movements trying to be too clever or because they have let their emotions get the better of them.

On 24th February, the day Russia invaded Ukraine, we saw a spike in customers withdrawing funds from their accounts (almost double what we would have expected), presumably because they expected a large market drop would come. But news of the invasion was publicly available information that every investor in the world was basing decisions on. The news wasn’t even out of the blue, Russia had been building up forces on the border for weeks and many investors had already acted on the perceived risk of invasion.

With the benefit of hindsight we can now see that some CIRCA5000 investors succumbed to emotional pressure and sold at the very time they should have been buying.

The 24th February was the 2nd best day of the quarter to invest and someone who invested in the MSCI World, a global stock index, would have made 10% profit by the end of March. The next day alone, they would have made 3.7% profit.

Missing the best days in the market has a hugely negative impact on an investor’s long term return as evidenced by research carried out by JP Morgan. Whilst we do not know if the 25th February is going to be one of the best days of the year yet, it was certainly a very good day.

CIRCA5000 is built for long term investing, and so we were pleased to see the vast majority of our customers continue to invest during this difficult period. The market has rewarded their consistency. And so the old adage holds true for now: investing is about time in the market not timing the market. It is prudent to regularly assess your investments but letting the dust settle after major events is often wise too.

This article does not constitute financial advice and is for information purposes only. When investing your capital is at risk. You should carefully consider whether opening a CIRCA5000 pension or transferring your old pensions to CIRCA5000 is right for you. Please note that tax rules and reliefs depend on your personal circumstances and might change. CIRCA5000 does not provide financial or tax advice and you are responsible for your own tax reliefs/payments.