Whether you keep a daily eye on the FTSE 100 or are just starting to think about investing in the stock market, it is worth considering your goals and expectations regarding share investment. As with most things financial, typically, the more time you have to implement a strategy the better the results. With a 10 year view on stock market investment, small investors can afford to stay calm through the slumps.
The probability of a gain
Statistics show that the longer an investor holds, the more likely there is of a financial gain. This chart by Woodford Datastream takes data from over 50 years of trading and represents the likelihood of a gain in short and long term scenarios.
Heads or tails?
The reality is that day traders and even week traders stand just a little more chance of a financial gain as flipping a coin.
Whereas those with a 5 year or 10 year view are virtually guaranteeing their investment success – although, of course, nothing is a given when it comes to share investment and clearly some investments, and indeed portfolios, do luck out.
Small investors should think long term
Unless you are dabbling in share investment in a serious way, then there is no need to focus on the daily ups and downs of the FTSE 100, which is subject to fluctuations based on other trader behaviour and market conditions.
Aspirations to earn a financial gain from investment in stocks and shares should be over the longer term, say 5 to 10 years.
By taking a longer term approach, fluctuations can be ironed out as the strategy evolves and any unprofitable decisions can be recouped by a change in tactics.
Small investors need to adjust their thinking
However, whilst a longer term approach means investors need not panic at the first sign of their fund or portfolio taking a dip, with recent global events, it pays for all investors to be open minded and adjust their thinking.
With the new economic powerhouse, China, taking a tumble in terms of it’s economic position, prices for oil and other commodities have taken a hit. This may seem a far away reality to the average British investor, however, everything is closely interlinked with trading and can have a knock on effect on any share fund.
It’s always good to keep up-to-date with current financial affairs and working with a professional financial adviser who understand investments is highly likely to increase your stocks and shares performances.
The world economy is still growing
The positive news is that the world economy continues to grow at a 3% average, reports Ruth Sutherland for the Daily Mail. Whilst fluctuations such as China will inevitably occur, typically, growth resumes eventually.
The rise in interest rates in the US demonstrates that the world’s leading economy is making steps in recovering from it’s financial pit. Similarly, promises of rate rises in the UK has the same intention.