The Bumpy Road to the Market’s Long-Term Average

by Amyr Rocha Lima, CFP®

In the investing world, we like to use annualised returns when discussing the long-term performance of an investment portfolio. It’s certainly not a perfect gauge, but it’s pretty much the best we’ve got.

Furthermore, investing is not an exact science, so we have to rely on many assumptions and historical evidence to develop a reasonable investment strategy.

As a financial planner, I play a critical role in helping my clients formulate an investment strategy and stick with their financial plan so they can weather these ups and downs.

Since 1956, the UK stock market has rewarded investors with an annual return of about 11%.

But it’s important to remember that returns in any given year may be sky-high, extremely poor, or somewhere in between.

  • Annual returns came within two percentage points of the market’s long-term annualised return of 11% in just seven of the past 65 years.
  • Yearly returns have ranged as high as 54% and as low as -26.46.
  • Since 1955, annual returns have been positive 49 times and negative 16 times.
Understanding the range of potential outcomes can help you stick with your financial plan and ride out these inevitable ups and downs.

Interested in knowing more about our investment approach?

If so, here’s what I’d like to offer you: a (virtual) cup of coffee and a second opinion.

By appointment, I would be delighted to have a chat with you about your situation. I will ask you to briefly outline your financial goals – in other words, what you hope your investment portfolio will do for you. Then, I’ll review your strategy with you.

Interested? Feel free to contact me here.

I look forward to hearing from you!

Amyr Rocha Lima, CFP® is a partner at Holland Hahn & Wills LLP, a financial planning practice based in Kingston upon Thames. He specialises in working with successful professionals age 50+ helping them reduce taxes, invest smarter and retire on their terms.

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