to help you make informed decisions about your wealth

Even keel

09 January 2019

Whatever 2019 has in store for markets shouldn’t alter the course for long-term investors.

The second half of last year saw the return of volatility in stock markets, as concerns over slowing global growth and trade tensions kicked in. Many global equity markets consequently had their worst year in a decade.

In contrast, 2017 had been the least volatile year since the early 60s, as President Trump’s market-friendly policies drove most global equity indices to post double-digit returns.

As these recent trends illustrate, it’s impossible to know how your investments will perform over the next week, month or year. But that shouldn’t matter if you are investing money that you don’t need for five years or more.

Over the shorter term, returns are usually driven by random shifts in sentiment or momentum, rather than by the inherent strengths or weaknesses of a company, portfolio or investment strategy. Over the longer term, the best companies will prosper and investors who bide their time will be rewarded.

The chart below shows the rolling annualised returns from the MSCI World index for all one and ten-year periods over the last 20 years. The fluctuations in returns over one year can be extreme, ranging from gains of over 44% to losses of nearly 32%.

In contrast, the long-term returns are far more consistent, as investors who buy and hold can smooth out the peaks and troughs.

Source: Financial Express. Data for the MSCI World index from 31/12/1998 to 31/12/2018. Please be aware that past performance is not indicative of future performance. The value of an investment may fall as well as rise.

If you want to achieve real returns on your money you need to take some risk. Market corrections and short-term unpredictability are some of the inevitable challenges that investors must contend with.

That’s why a long-term focus is so important. The rewards for patient investors are fewer sleepless nights and a better chance of achieving long-term financial security.


The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or adopt a strategy.

Source: MSCI.  MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein.  The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products.  This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.


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