29 reasons not to invest
29 reasons not to invest
Wars, disasters, economic strife and political instability have been persistant themes over the last three decades and the can affect peoples' attitude towards investing.
In many cases they make an already tough decision to part with your money and invest even harder, leading some to not invest at all. Behavioural scientists have a name for this; loss aversion. They estimate that the psychological pain of losing is about as twice as powerful as the pleasure of gaining, hence why some people shy away from the risks involved with investing.
Yes as research shows, staying out of the stock market over the last 30 years could have proven costly.
The eroding effects of inflation and historically low interest rates would have eaten away at the value of your money if you decided not to invest. While investing in the stock market carries greater risks, and volatilty it could have boosted your returns.
Of course, choosing to invest depends on your personal circumstances and if you are unsure as to the suitability of any investment, speak to a financial adviser.
The chart below illustrates the change in real value each year of £1,000 invested in UK stocks, a UK bank account or left under your bed:
These figures are not adjusted to include any account charges or investment fees.
Please remember that past performance is not a guide to future. Investing in one geographical region may result in large changes to the value of your investment, which may adversely impact the performance.
In some circumstances, up to £85,000 in a UK bank account is protected by the Financial Compensation Services Scheme.
The last 30 years have included some of the biggest stock market crashes in history.
In 2001, the FTSE All-Share index fell by 13% It was in the wake of the bursting of the 'dotcom' bubble at the end of the 1990's, when highly-rated technology stocks were sold off. But also coincided with the devastating attacks on the World Trade Centre in New York in September. The period also saw a global economic slump, although the UK managed to avoid a recession. The FTSE All-Share index was down 22% in the year to the end of 2002.
The global financial crisis of 2008, which began with the gradual collapse of the housing market in the US the year before, led to the worst global recession since the 1930's. In the year to the end of 2008 the FTSE All-Share was down 30%, its worst annual performance since 1989.
The table below illustrates how your investment returns could build up year by year between 1989 and 2017 and shows the damaging effect inflation can have on your wealth. It also shows global events that investors could have used as excuses not to invest in any of those given years.
Source: Schroders. Refinitiv data for the FTSE All Share total return index, which includes dividends. Inflation numbers supplied by the Bank of England. Savings data from Building Societies Association and http://www.swanlowpark.co.uk/savings-interest-data.
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