How to build lasting wealth: the importance of staying invested

THOSE investing for the long term can generally expect a smoother investment experience, provided they maintain emotional discipline. Knowing you're committed to a longer investment horizon helps you manage inevitable market fluctuations with patience, consistency, and composure. In this article, we explore how these principles underpin successful wealth creation.

- SHERRY TAPFUMA

Firstly, effective long-term investors accept market volatility as entirely normal. Short-term fluctuations should be viewed as temporary distractions rather than threats to your strategy. Historical data clearly illustrate that, although markets experience downturns, they always recover and continue an upward trajectory.

Investors who panic and exit during downturns risk locking in losses, disrupting the power of compounding, and missing out when markets rebound. By remaining composed, long-term investors position themselves optimally for market recoveries.

Investors attempting to time the market typically experience suboptimal results. They frequently miss out on gains by exiting the market during downturns and only reentering after significant recoveries have occurred. From our experience, clients who resist the temptation to monitor every short-term fluctuation fare significantly better.

Avoiding market timing reduces investment risk by ensuring you are consistently invested, particularly on days when markets surge unexpectedly. Historical analysis reinforces this approach, demonstrating that markets fluctuate unpredictably in response to economic and political events, making accurate timing nearly impossible, particularly relevant during this global election year.