The real enemy - Inflation

The number one enemy of the long-term investor is the financial dragon called inflation (the silent but steady increase of prices over time). It is fair to say that the recent rise to 7% has been kept anything but silent.

Over the last 30 years (about the length of an average two-person retirement), inflation in the UK has resulted in an item costing £1 in 1992 now costing £1.88 in 2022. Your purchasing power has almost halved!

But £1 invested in the UK share market is worth £3.52 today, and that’s ignoring 30 years of dividends!

And this during a three-decade period that included the dot-com bubble, the great financial crisis, and the Covid-19 pandemic.

And what did you have to do to earn this? Two (behavioural) things:

1. Invest and stare out of the window (much harder than it sounds).

2. Be willing to see your investment value decrease by about -15% on average every year without being panicked into selling. Think of the yearly declines as hurricanes, unpleasant but they pass.

 
Guiding you through these periods of volatility is why we exist.