Investing on the JSE All Share Index over the past three to four years has proven to be challenging from a return on investment point of view, particularly when the ’less’ risky asset classes have been delivering superior performance. However, it is crucial to remember that time is a critical factor when investing. This can be demonstrated when reviewing the statistics of remaining invested in the market over the past 20 years:
- If you missed the Top 5 days on the JSE, you would have missed out on an additional 28% return.
- If you missed the Top 10 days, you would have missed out on an additional 45% return.
- If you missed the Top 30 days, you would have missed out on an additional 78% return.
- If you missed the Top 50 days, you would have missed out on an additional 89% return.
If you were not invested on the JSE over the past 3 months alone, you would have missed out on an additional return of 9%. These types of returns do not come without risk, however, one must bear in mind that over the same 20-year period, the average time that it has taken for the JSE to recover after a major fall is roughly one year. This reiterates the notion that ‘Time in the market rather than timing the market’ is one of the most beneficial investment strategies.
All long-term (five years or longer) investment portfolios should have exposure to shares as it generates inflation-beating growth. If you would like advice regarding your financial plan, please do not hesitate to contact us.
Stephan Steinmann CFP®