It’s longer than most investors believe it to be
INVESTORS OFTEN underestimate the length of time their investments will be held. Accordingly, it is important that they recognise and embrace longer time horisons for optimal investment outcomes.
If you consider someone entering the workforce today, it is reasonable to assume that they have a 70-to 75-year investment time horison consisting of 40-plus years’ investing for retirement, and 30 years’ living off their accumulated investments in retirement.
Yes, this is an extreme example—but even someone mid-way through their working career realistically has a 40-to 50-year remaining investment time horison. Unfortunately, underestimating your investment time horison often results in you being too risk averse with what should be viewed as long term investments.
Longer than you think
To better understand and illustrate investor holding periods, we analysed the average holding period of clients invested in various products on the Ninety One Investment Platform. The results are shown in Figure 1…