Shortest time to invest in shares

sevenhills

MaxiRobriguez said:

Someone will be along to put the chart on soon enough but I think year 1 was more like 55%, with 75% only occurring until years 3 or 4.

The FTSE is higher now than it was 5 years ago, by around 15%, which beats many low-interest savings accounts.

I would say that the FTSE is low at the moment, it's at the same level it was 4 years ago.

Albermarle

MaxiRobriguez said:

waveydavey48 said:

I remember seeing a graph on a post on here with the chance in percentage terms of making any profit on shares for various timescales. If I recall correctly it was the case over the last hundred years or so that 75% of the time you would make a profit after 1 year and the chances improved as time went on.
I can't remember any more and the usual caveats apply of course.
Depends how brave/foolhardy you are I suppose.

Someone will be along to put the chart on soon enough but I think year 1 was more like 55%, with 75% only occurring until years 3 or 4.

Even then it still gives a 3 to 1 chance of a loss, and more importantly it does not quantify the scale of the loss, which could be large .
I think the chart in question starts to look more comfortable after 7 years, with only around a 10% chance of loss ( based on historical statistics of course ) 

Thrugelmir

JohnWinder said:

Reader alert: there are no guarantees that holding stocks for 12 years WILL result in a positive return, even if there's never been a 12 year period without a positive return. And whether that return is inflation adjusted or not might be something to ponder.

I obviously read better quality research. 

eskbanker

MaxiRobriguez said:

waveydavey48 said:

I remember seeing a graph on a post on here with the chance in percentage terms of making any profit on shares for various timescales. If I recall correctly it was the case over the last hundred years or so that 75% of the time you would make a profit after 1 year and the chances improved as time went on.
I can't remember any more and the usual caveats apply of course.
Depends how brave/foolhardy you are I suppose.

Someone will be along to put the chart on soon enough but I think year 1 was more like 55%, with 75% only occurring until years 3 or 4.

....and here it is (sourced from https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/ with the dataset specified below the chart):

Source: Macrobond; MSCI World Equity Mid and MSCI Large Cap Total Return in GBP, 1 January 1971-20 May 2020

sevenhills

eskbanker said:

....and here it is (sourced from https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/ with the dataset specified below the chart):

That is for just one share. If you bought 10 shares x £5,000, the odds would be better.

eskbanker

sevenhills said:

eskbanker said:

....and here it is (sourced from https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/ with the dataset specified below the chart):

That is for just one share. If you bought 10 shares x £5,000, the odds would be better.

Where are you getting that from?  It doesn't seem to be clearly stated as far as I can see but the impression is that they're analysing returns at a total market level....

grumiofoundation

sevenhills said:

eskbanker said:

....and here it is (sourced from https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/ with the dataset specified below the chart):

That is for just one share. If you bought 10 shares x £5,000, the odds would be better.

Where do you get the idea the chart is for "one share" ?

sevenhills

My mistake,

Where do you get the idea the chart is for "one share" ?

My mistake. So its not really about shares at all, more comparable to unit trusts.

eskbanker

sevenhills said:

My mistake,

Where do you get the idea the chart is for "one share" ?

My mistake. So its not really about shares at all, more comparable to unit trusts.

It is about shares but at an aggregated level, as it has to be when analysing average performance - you could have one line per share but that would simply show a hugely messy variety of trends, with way more volatility, so the only meaningful way to represent the concept is to illustrate it via a pseudo-index....

Linton

ISTM that in deciding whether to invest for say 5 years when you have the money now what is important is more how much you cared whether you ended up with less money than you started than the probablilities.  After all if you lost out when having sufficient money was seriously important the fact that it was only a 1% chance is not likely to be much consolation.

So assuming that having sufficient money is seriously important (if it wasn't the issue is not worth discussing) then I would advocate switching to cash immediately.  If losing possible investment gain was a concern you could always up the risk of your real long term investments with the justification that an additional part of your wealth is held in cash.