Glass half full or glass half empty?

Love this latest article & chart from the team @ Booster. Check out the probability of positive returns over time! It’s important to remember your own timeframe & to not sweat the small stuff. I won’t comment on my thoughts on cats & catteries but those who know me well will know my farm girl views.

Some holiday perspective

As the holiday season approaches, it’s a good chance to sit back and reflect on what really matters, away from the hustle and bustle of daily life. For investors and those who closely follow financial markets, this can mean taking a step back from checking your portfolio’s daily returns and instead make sure your portfolio is still aligned with your long-term goals and risk tolerance.

With plenty happening during the year, the temptation to keep a very close eye on your portfolio’s returns is high. At first glance, it might, therefore, seem a little worrying that global share markets delivered positive returns on only just over half of days this year. However, this is actually in line with history. Over the past 35 years, ‘only’ 54% of days have seen positive returns. Put another way, when you look at the share market on any given day, whether it’s gone up or down is pretty much a coin toss.

Combine that with our emotional tendency as humans to feel twice as much pain from a loss as we do pleasure from a gain. It’s then pretty clear that someone who checks their investment balance every day is not going to have a very pleasant time!It gets better though. Despite ‘only’ rising on 54% of days, someone who just checked in annually would have seen a positive return 82% of the time. This rises to 93% of 10-year periods and all 15-year periods, reaffirming that most short-term returns are ‘noise’ for someone with a long timeframe.

In investing, like in many things in life, the best way to have a good experience is to have the right perspective.

Thinking about it this way, long-term saving and investing have some similarities to going on holiday. When you’ve packed up and headed out on the road to your destination, if you run into roadworks on the way, you’re unlikely to respond by turning the car around.

And when you get there, with glass of wine in hand, you probably won’t call the cattery or dog kennel each day to see how the pets are getting on

So feel free to sit back this summer – if your investment approach has been chosen with your adviser to be in line with your timeframe, aims and ability to ride out shorter-term ups and downs, then your portfolio will thank you for it and you will enjoy your break SO much better.