In the chart above (from FE Trustnet), the line represents the FTSE All Share (UK companies) over the last 12 months prior to January 2023. As you can see, the index experienced volatility aross the year. However, the index now stands at nearly its highest point in the last 12 months.
Many people would not have considered investing in early March. Yet had they done so, a 8% – 10% return to date would not be unrealistic. Of course, at the time, things were very uncertain and there was a strong feeling that the dire situation in Ukraine could worsen.
The market has bounced back slightly, but there is still potential for growth as the conflict appears to concentrate more in the east of Ukraine – limiting the chances of it spilling over into a global confrontation. By waiting until the situation settles down (as many investors are doing), it is very easy to miss out on the best days of the recovery.
Regular investing has an added advantage, as your funds can benefit from pound cost averaging. When the market rises, you profit from the investment gains. When the market falls, you have the advantage of low prices and can buy more shares for the same monthly contribution.
We cannot predict or time the market. A long-term plan relies on investing and staying invested, through the peaks and troughs.
