Some of you may recognise this famous line from the book and film ‘The Hunger Games’.
Set in a dystopian world, the nation of Panem is divided into 12 districts and each year two adolescents from each district must come together and fight until the death. There can be only one winner.
The Hunger Games are televised for all to see and acts as a deterrent by the state to quash any uprising and show their power.
The star of the story is Katniss Everdeen, a young girl who takes the place of her even younger sister in the Hunger Games. She’s brave archer who stays in the shadows and bides her time.
The phrase ‘may the odds be ever in your favour’ is spoken to contestants before they enter the games arena.
The Investing Games
Investing your life savings can feel like going into battle.
You enter the financial arena and have to battle the onslaught of negative media with headlines such as ‘billions wiped off the stock market’ whenever a problem occurs in the world.
There are also the scams, the adverts that promise you ‘guaranteed returns’. The ones that if they look too good to be true, they probably are.
You also battle other investors as remember there are always two sides to every investment transaction. You may choose to buy shares but there will be someone on the other side who thinks it is a good idea to sell shares.
Thankfully, to win the investment games it is pretty easy and the odds are actually in your favour.
The odds really are in your favour
Investing in the shares of the great companies of the world is also known as investing in global equities.
These are the companies that you buy goods from and use services from every day. You become an owner of these companies and share in the profits.
Over the last 96 years the global equities sector has delivered a positive return 77% of the time.
Even UK equities alone have delivered a positive return 74% of the time. Meaning there has only been 25 years since 1926 when the return on UK equities was negative.
In fact, there has only been five years when UK equities produced a negative return between -10% and -20%, three years when the return was between -20% and -30% and only one year (1974) when the return was lower than -30%.
In the investing world a ‘bear market’ is when the price of equities has fallen 20% below its last peak.
A ‘bull market’ is the opposite. It happens once the price of equities has risen 20% from its last low.
In the UK, over the last 96 years, the average bear market has lasted one year and six months. With an average return during these periods of -34%.
The average bull market has lasted seven years with an average return of 496%.
What’s more, the biggest gains always follow the biggest falls.
The key point to remember is that in order to win the investing games you need to be more like Katniss Everdeen.
You don’t need to get involved in the battle. You can shoot your arrows accurately at the start into the right investments and then bide your time in the shadows.
The greatest tactic an investor can use is remain patient and wait. Let the games play out because the investment odds are in your favour.
If you are not sure what to do with your personal and workplace pensions at retirement then please get in touch for a free no obligation 15-minute call. We would be happy to review your position, explain where you stand and what you need to do to get the outcome you desire. We have created hundreds of happy retirements over the years. This could be you too.
Risk warning:
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.
