The Optimistic Investor

Posted 01.10.2020

It’s not easy. No one predicted a global pandemic and attempting to keep track of your own investments throughout turbulent times can be a real challenge.

Long-term financial security is more likely to exist if we are pessimistic and able to survive throughout short-term events.

Even throughout the most prosperous periods comes a string of problematic downturns. Over the flourishing decades of the 1950’s and 1990’s, millions of Americans became unemployed in 1958 due to economic downturn. Yet the 50’s led to American’s experiencing the greatest boost in income than ever before.

Based on historical trends, the world faces instability roughly every 10 years. Every year has a one in ten chance of bringing a new disaster or problem. If we think of this on a more local or national scale, we can expect uncertainty every few years.

Several factors can influence the economy’s current state, be that a global pandemic, natural disaster, or political change. We should always be prepared for life-altering events to come our way.

Choosing to save in a pessimistic way brings comfort throughout times of trouble. Being reserved about your spending can help later down the line during times of uncertainty.

‘a miracle a month’

However, the odds are in our favour. Whilst we will encounter disaster and downturn in our lifetime, Littlewoods law of miracles deduces that we will encounter roughly one miracle a month, where life surprises us in positive ways.

When it comes to investing, setbacks are often only temporary, historically long-term trends commonly highlight consistent growth throughout the years, inclusive of downturns as a result of unexpected events.

Good investing comes from enduring difficult challenges in order to enjoy long-term progress, whilst benefitting from compounding over years of accrued interest during prosperous periods.

When it comes to your investments, it is impossible to measure progress day-to-day, due to the ever-changing external environment. Yet over a period of time, trends become clear and being wise about how much you choose to save can make a great difference.

We may stand to face a disaster a decade, but with a miracle a month, the odds truly are in our favour.

 

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

 

Source: https://www.collaborativefund.com/blog/save-like-a-pessimist-invest-like-an-optimist/