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Posted on: 09 Mar, 21

Whatever age you are, wherever you are on life’s journey, it’s human nature to live in the moment and cope with whatever challenges life throws at you. Selecting the most appropriate investments to align with your values and life goals requires undertaking the right planning to accumulate wealth over the long term.

Your investment goals will change throughout the course of your life. And depending on which side of the coronavirus (COVID-19) financial equation you’ve been on, the last year has been possibly the strangest year ever for your investments. We’ve experienced a stock market collapse, soaring unemployment, millions deferring their mortgage payments — and a booming housing market, plus bulging savings accounts.

Uncertainty and volatility in markets

But general economic factors, business conditions and political events are all part and parcel of investing throughout life’s journey. Over any given time period we can expect to see the economies go through a series of ups and downs leading to uncertainty and volatility in markets — which is why you need to take a long-term view. It’s also important to remember that there is a big difference between saving and investing. Some investors may think of cash as a safe haven in volatile times, or even as a source of income. But in an era of low interest rates, the returns available on cash will be depressed to near zero, leaving cash savings vulnerable to erosion by inflation over time.

Long-term investment objectives

With interest rates expected to remain relatively low for the foreseeable future, you should be sure any sizeable allocation to cash does not undermine your long-term investment objectives. Some investors who leave cash on deposit may miss out on future performance that will have come from staying invested over the long term. Of course, there are also reasons to invest conservatively — market volatility and preserving the funds you have, to name just a couple. But there is also a tradeoff between risk and investment returns. Investing is a long-term activity. The more risk, the more potential return; the less risk, the less return potential.

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