Multi Asset Boutique

Why Long-Term Investing Still Pays Off

White Paper

Over the last 40 years, financial markets have proved to be a gold mine and savvy investors knew how to take full advantage of this. Humans tend to enjoy extrapolating past successes into the future – including when it comes to returns on their investments. Seasoned investors, in particular, have ambitious expectations for returns. By contrast, younger generations, perturbed by the financial crisis, have little faith in investing. Which group is right?

In an attempt to answer this, the first section of this white paper takes a look back at 300 years of financial market history. This offers a number of revealing insights, such as how dependent investment returns were on the economic climate and which ratio of equities in a portfolio paid out the most in the long run. Using these patterns, we then deduce what trends investors really need to acclimatize to in light of today’s low interest rates, which – incidentally – are not so abnormal at all.

In the second section, we look to the future. The handbook for our return estimates, based on a seven-year investment horizon, explains the potential of various asset classes. We also disclose our estimation methods – working entirely on Albert Einstein’s mantra that things should be made as simple as possible, but not simpler.