‘Live like today is your last, invest like you’ll live forever.’

I’m not sure who first said this, but it’s likely a variation of the Mahatma Gandhi quote: Live as if you were to die tomorrow. Learn as if you were to live forever.

Whatever its origin, when it comes to investing the saying rings true. People must realise that their investments are for the long term and that regardless of the volatility and ructions that we might experience today, money well invested will provide good returns in the tomorrows.

When I was a financial adviser, I was often asked what was going to happen in markets. Early in my career, I would have a stab at answering – maybe I’d say that interest rates would go up and that equities would go down; or that property was overpriced and that market would flat line.


I would be right sometimes but not others, and as I’ve gotten older, I spend much less time thinking about what might happen in the short-term and much more about the long term.
The truth is no one can say with any confidence what might happen in the markets tomorrow. Nor next week, or even next month. Things are even a bit fuzzy when it comes to next year.

Long-term investment returns hard to beat

However, regardless of the noise coming out of the market today, I can quite confidently predict whether market returns will be good over the next 10 years (I think they’ll be very good, as I outline below). And, I can predict with almost complete confidence that market performance over the next 100 years will also be good (even if few of us will be here to see if I’m right!)

The critical thing to understand is that returns from a diversified portfolio are much more predictable and most likely to be good over the long-term. We might have no idea whether the next few weeks will be good for investment performance, but we have a far higher degree of certainty for the coming years and decades.

Remember, retirement is a long time

It’s likely that most people reading this will be long-term investors. Regrettably, however, we often think of retirees as having short investment time frames. Yet, a woman at retirement age (65) has a life expectancy of nearly 90 years. That means she could well be investing for the next 25 years – that is not a short time.

I hate to hear of retired people clinging to term deposits because they think that the returns from them are now good. Yes, they are certainly better than they were, but the real rate of return (after tax and allowing for inflation) means that they’re actually negative; in other words, term deposits are still losing spending power. A long-term strategy of rolling over term deposits for retirement income is not a good one – the low returns will eventually wear you down.

Tune out the noise

The problem is that people are mesmerised by the negative noise coming from equity markets on a daily basis. This sees many retreat to safe, short-term investments (term deposits) even though they’re actually investing for the long-term. Yes, share markets are down right now, but over the long term (which is the time frame for which you are likely to be investing) we can be pretty sure they will be good. A well-diversified portfolio is the right thing for savings in retirement.

There is certainly a lot of negativity in markets at the moment: we have two horrible wars, and the possibility that interest rates could rise a bit further. I agree that these things are unsettling, but they should not drive a retreat to term deposits - they are no place for long-term investment.

Still grounds for optimism

While current events are unnerving and higher interest rates tempting, you should not let these factors deter you from investing for the long term. There are some excellent, world-changing things happening in AI, robotics, automation, cleantech, biotech, medical devices and others. The progress being made in these areas will not stop because of wars or interest rates. Technological advances will continue for the companies involved and in the coming years profits will flow through to investors.

Short-term alarms should not stop long-term investment. Although I am greatly disturbed by some of the things that are happening today, in the long term I am very optimistic. There are some excellent innovations happening in the world, too. Investment markets can be volatile, but bad times are followed by good. Although no one knows exactly when, eventually markets will bounce back – they always have.

Written by: Martin Hawes

Martin Hawes is not a Financial Adviser or a Financial Advice Provider, and the views in this article are not intended to be financial advice. The views and opinions are general in nature, and may not be relevant to an individual’s circumstances. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser. Martin Hawes is a director and shareholder in Lifetime Income.