Watching from the sidelines

Taking your money out of the market may seem like a safe idea,

but it might take a bite out of your long term returns.

In recent times, markets have seen levels of volatility which may have caused some investors to shy away from investing, potentially putting their long-term financial goals at risk.

But, just as investors can be slow to recognise a retreating market, many also fail to see an upward trend in the market until it's too late - when they've missed an opportunity for gain. Missed opportunities like these can take a bite out of an investor's returns.

Please remember, the value of investments can go down as well as up and you may get back less than you originally invested.

Missed Opportunities

  • Because many investment decisions are based on emotion, people may be prone to make irrational decisions during volatile markets. For example, many investors think they can predict losses, which is almost impossible. In effect, what these investors are trying to do is avoid the worst days, but in the process they may also be missing out on the best days.
  • The table below is an example of what might have happened if an investor tried to jump in and out of the markets to avoid potential losses. By missing just a few of the stock market’s best single-day advances, you could put a real crimp in your potential returns.

Jumping In and Out of the Market May Cost You

Period of InvestmentGlobal BondsGlobal EquitiesUK Equities
Cumulative Total Return of Global Bonds as represented by the Barclays Capital Multiverse Index, Global Equities by the MSCI World Index and UK Equities by the FTSE All Share Index. Performance in GBP for the ten years to 31/12/16.
Stayed fully invested 122.0% 144.0% 71.8%
Miss the 10 best days 57.0% 51.9% -6.2%
Miss the 20 best days 27.6% 9.9% -35.6%
Miss the 30 best days 7.7% -17.4% -53.0%
Miss the 40 best days -6.2% -35.6% -64.8%

Past performance is no guarantee of future performance. An index is unmanaged and one cannot invest directly in an index. Cumulative Total Return of Global Bonds as represented by the Barclays Capital Multiverse Index, Global Equities by the MSCI World Index and UK Equities by the FTSE All Share Index. Performance in GBP for the ten years to 31/12/16.

GET OFF THE SIDELINES WITH FRANKLIN TEMPLETON INVESTMENTS

By speaking to a financial adviser, you can discuss your investment options to get off the sidelines and put your cash to work, with a solution that's right for you.

Franklin Templeton Investments has a range of funds which take a long term view, leveraging disciplined, time-tested strategies and assessing risk as rigorously as they seek reward.

View our key funds

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