How staying the course gives you the long-term edge

In a world where instant gratification is king, it can be hard not to get distracted by the lure of short-term gains. But taking a long-term view of your investments and staying the course can give you the edge to achieve better investment returns over time. Thandi Skade explores the opportunity cost of failing to stick to your long-term investment plan and how you can avoid paying behavioural penalties.

It is often said that investing is a game of patience. Like in chess, the best moves are often the ones that require discipline and playing the long game. In some ways, staying the course can be seen as a checkmate move: You “win” by remaining committed to your long-term investment strategy, effectively blocking the common behavioural pitfalls that can lead to inferior investment performance.

One of the mistakes many investors make is switching between funds or making withdrawals in an emotional response to short-term market movements. This can erode returns over time, as illustrated in Graph 1, which shows behaviour and resultant returns in three hypothetical investment scenarios. In all the scenarios, we measured the performance of a R100 000 investment initiated in January 2020 over the period to December 2022.  

Read full article on https://www.allangray.co.za/latest-insights/personal-investing/how-staying-the-course-gives-you-the-long-term-edge/

May 24 2023 By Thandi Skade - Allan Gray