Investors must think long-term and hold their nerve during volatile market conditions, warns WMA – 14th September 2015

Investing can help boost the economy and create growth and jobs

The current volatility of the world’s stock markets may make private investors consider jumping ship and selling their shares. However, the Wealth Management Association (WMA) warns that shareholders must think long-term if they want to reap the rewards of their investments.

The WMA points out that doing so allows individuals a way of actively participating in the actions of companies. It also helps them build wealth for their future – something that is vitally important when almost a third of the UK’s population are unsure whether their pension pot will be enough to live on once they reach retirement age [1]. Enthusiasm for investment via the Stock Market has often fluctuated. However, figures recently revealed by the ONS show that individual share ownership has risen to 12 per cent of the market, an increase from the 10 per cent recorded in 2010 and 2012 [2].

Liz Field, WMA CEO, comments: “With global markets currently see-sawing, some people might think a dark cloud has formed and may be tempted to withdraw their money until calm returns.

“However, investors must hold their nerve and continue to plan for the future.  Recent research has shown that those investors who stay calm and adopt a buy-and-hold approach will see better days and much better returns [3]. With many shareholders investing their money as a pensions nest egg, or to pay for grandchildren’s education further down the line, it is vitally important that calm prevails.“

The ONS figures also reveal that foreign investors in UK-quoted stocks are dominant, with “rest of the world ownership” standing at 54 per cent at the end of 2014 [4].

Liz adds: “What we really want to see is UK retail share ownership increasing. Private investors are actively engaged in the country’s economic performance, as they have a stake in the free market economy which is a huge boost to the UK.  The WMA has been calling for the government to help create a culture of investments and savings in this country – and that can only be achieved by educating the public and making investment easier to understand.

“Ultimately, the key role for corporate Chairmen and CEOs is to maximise shareholder value in their businesses by keeping them profitable and successful.  In doing this they must respond to the interests of the shareholders who own the companies, including private individuals, partly by sharing company profits with them through dividend payments.  The wider the range of investors, the wider the interest in company success and the greater the pressure on management to ensure accountability for what they achieve to these owners.

“A large number of people in the UK have little or no investments or savings, but investing long-term in real assets can help people retire more comfortably or better provide for their families.  It’s an often held misconception that investing in stocks and shares is something only possible for the rich but it is an option which is firmly open for all.”

ENDS