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November 9, 2020

Our Investment Philosophy – ‘Patience is a Virtue’

We know the old adage: “Patience is a virtue.” A truth hard to hold on to in our current world of Trump, Brexit, global pandemics and climate crisis. Here in Fife, we’ve been contemplating how best to approach the inevitable stock market swings and how we can secure stability for client investment through volatile times.

For us, strategic investment is about long term thinking and maintaining a clear perspective to ride out the market bumps. Whilst it can be easy to get nervous during periods of uncertainty, taking impulsive actions can mean the difference between success and shortfall.

A long-term focus has key benefits which hold the secret to successful investing:

Riding out the storm

When markets drop, it can be hugely stressful. The first instinct may well be to sell off investments, however by jumping ship too quickly it makes losses real. Holding your nerve with long term investing has proven the most secure way to handle the inevitable market bumps – in fact Bloomberg data shows that people who invested for any 10-year period since 1986 until Feb 2019 in the FTSE 100 index, have an 87% chance of making a gain. Investing during the difficult times can help smooth out the highs and lows, and reap future rewards.

Time for your money to grow

Quite simply, the longer money remains invested, the longer it has to grow. Attempting to move in and out of the market at supposed “ideal” times can have serious consequences. It’s important to consider time not timing, and history shows us that through good years and bad, the market has done well over longer periods of time. Try not to check investment value too often. Stick to the commitment and allow time to work its magic.

Avoid unnecessary trading fees

Buying and selling investments means racking up trading fees every time one jumps ship. Long term thinking can help keep fees to a minimum and make the most of returns in the long run.

Simplicity reigns supreme

Sometimes the simplest solution is the almost always the best. Investing doesn’t need overthinking or savvy financial trickery. Instead, it requires a great dose of patience, a clear head and a considered strategy to sit tight and make the most of the returns. Simple.

Keep calm and stay focused

The bottom line is that emotional reactions to market events are perfectly normal but when it comes to investment, it’s all about head not heart. We are confident that a long-term approach can and will prevail as it has done so many times before.

Keep focused on future rewards and remember the saying – “Patience is a virtue…”

If you’d like to discuss your investment options in more detail, please contact David Arthur via da@jameshair.co.uk for more information.