Although there is now a suggestion that interest rates are to increase for the first time in 10 years there is still no real end in sight to the historically low rates savers have been enduring, with many people are struggling to get a return on their cash.

The obvious alternative is the stock market, but a lot of people are apprehensive about the risks involved and the possibility that their hard-earned cash will disappear overnight.

But many who are fearful of stocks and shares don’t realise is that if you have some formal savings plan for your retirement it’s highly likely that you’re already invested in the markets.

Most pension funds be invested in the stock market to one degree or another. Generally speaking a higher percentage will be in stocks and shares when you are younger, with this gradually tapering off into a greater proportion of cash as you approach retirement age.

It’s true that there is risk associated with stock market – as there is with all investments – which is why we’d never recommend that a portfolio is 100% invested in shares. In fact we only have one client who has chosen this route.

At Faron Partnership Ltd we believe the key to successful investing is by taking a blended approach to the asset classes you hold in your portfolio, together with patience.

Take this example:

This is a portfolio featuring 50% growth assets and 50% fixed interest. The figures are based on benchmark returns over a 20-year period ending December 31, 2016.

In this illustration the red line shows how a blended approach has performed over a 20-year timescale.

Think about what’s happened during this period in history. There have been several catastrophic circumstances that have impacted the markets, including the tech bubble bursting and the credit crunch, both of which caused the markets to plummet.

Patience Has Positive Outcomes

Yet, the investment has still fared well and goes to show that although we don’t know what the future might hold what we can see is that with patience and the right investment approach clients can have a very positive outcome.

When global events threaten our livelihoods and retirement income we appreciate there is a fear factor involved if someone isn’t used to investing in the stock market.

But as we’ve already highlighted, most people are doing it anyway without realising it because most people don’t pay much attention to the asset classes within their accumulated pension fund – the headline figure is all that matters.

Some feel that if the markets start plummeting you should sell everything and wait for the recovery before buying again but trying to time the peaks and troughs is a fool’s errand.

Time after time we have seen that the people who make money from investing in the markets are those who are patient and play the long-term game.

After all, it’s time in the market rather than timing the market that produces the best outcome!

Remember, the value of your investments can go down as well as up. Past performance is not a reliable indicator of future outcomes.

For a free consultation about your financial needs call 0118 974 0159 or email andy@faronpartnership.co.uk.