Market ups and downs can test even the most seasoned investors. But when it comes to building lasting wealth, research shows that remaining invested and keeping emotions in check is often more effective than trying to predict the perfect time to buy or sell.
“Is now a good time to invest?” is a question that arises in every market cycle, particularly during periods of uncertainty. For long-term investors, the answer is often “yes” — because successful investing is typically less about timing the market and more about time in the market.
Taking a Long-Term View
Investing should be seen as a marathon, not a sprint. When markets fluctuate, it may be tempting to make short-term moves to avoid losses or chase quick gains, but this approach rarely supports long-term financial objectives.
Looking at stock market charts over decades reveals a pattern: while volatility is inevitable in the short term, markets have historically shown resilience, with periods of decline followed by recovery and growth.
Avoiding Emotional Investing
Emotions such as fear and greed are natural but can lead to poor financial decisions. Many investors are tempted to buy when optimism is at its highest — which can coincide with peak market risk. Conversely, selling during downturns often locks in losses and prevents participation in subsequent recoveries.
By recognising these behavioural patterns and maintaining a disciplined strategy, investors may be better placed to stay aligned with their long-term objectives.
The Risks of Timing the Market
Trying to predict both the best time to buy and the best time to sell is extremely difficult — even professional investors do not consistently get it right. External events, sentiment shifts and market shocks often occur without warning.
Missing just a handful of the market’s strongest days can have a significant impact on returns. For example, if £100,000 had been invested in the FTSE All-Share Index for the ten years to 31 December 2024 and held throughout, the investment would have grown by £81,930 (before fees and charges). Missing the five or ten best days would have reduced gains to £41,128 and £10,996 respectively, while missing 20 or 30 of the best days would have resulted in losses of £9,210 and £20,902 over the same period.
Figures are for illustration only, based on historical data. Past performance is not a reliable guide to future results. All figures are before fees and charges.
The Cost of Waiting to Invest
Some people postpone investing, holding capital until they feel market conditions are more favourable. While understandable, waiting can reduce long-term returns.
For those who are more cautious, a strategy such as pound-cost averaging — investing in regular tranches rather than all at once — may help smooth volatility and reduce the emotional burden of committing capital.
Principles for a Disciplined Strategy
A structured approach helps provide focus and reduce the risk of emotional decision-making. With the support of a regulated wealth management adviser, investors can:
- Define financial objectives and investment time horizon.
- Assess risk tolerance through a formal suitability process.
- Build a portfolio aligned to personal circumstances and goals.
- Diversify across assets, regions, and sectors.
- Select quality investment managers.
- Hold investments within tax-efficient structures.
- Review and rebalance portfolios regularly to reflect changing needs.
The Value of Advice
Investing is as much about mindset as it is about markets. While short-term conditions can feel unsettling, history suggests that long-term discipline often rewards those who remain patient.
Working with a trusted adviser helps ensure your portfolio reflects your risk profile, objectives, and personal circumstances. A long-term perspective, combined with careful diversification and professional guidance, can help you navigate uncertainty with greater confidence.
Important Information
This communication is for informational purposes only and does not constitute investment or tax advice. The information is based on our understanding of current laws and practices, which may change. Any statements concerning taxation or investment performance depend on individual circumstances. You should seek personalised advice from a regulated adviser before making financial decisions.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
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