Those who only stayed invested for one year could have seen either big gains or big losses. But, as the holding period increased, the worst-case scenario improved significantly and over a 20-year period even the worst-case scenario would have made investors money. Again, it\u2019s important to remember that past performance is no guarantee.<\/p>\n
Our Be Invested report found a big juxtaposition between the long-term nature of people\u2019s financial goals and their tendency to prefer cash.<\/p>\n
Overcoming psychological barriers<\/p>\n
It\u2019s completely natural to fear losing hard-earned savings. But, as the first chart shows, holding cash is not risk-free. It\u2019s just that the losses wrought on your cash by inflation are hard to see. \u00a0<\/p>\n
What\u2019s more, interest rates are expected to continue falling – meaning that cash returns are likely to drop further.<\/p>\n
You should only ever take as much risk as makes sense for you financially and that you are comfortable with. But if you do have ample savings, no \u201cbad\u201d debts, a long-term goal you\u2019re saving for, and fears around market volatility are still holding you back from investing, there are some things you can do to temper those concerns.<\/p>\n
1. Engage first with your pension<\/p>\n
Many people who don\u2019t feel confident investing will in fact already be an investor (via their pensions). It might help to engage first with your pension, check its performance, and realise that you are already experiencing the ups and downs that stock markets bring.<\/p>\n
2. Remember that cash is not risk-free<\/p>\n
Risk warnings are slapped all over investments – but there are no warnings when opening a cash savings account about the risks of losing money to inflation (something we suggest in our Be Invested report). Bearing this in mind can help when weighing up the risks and benefits of cash versus investments.<\/p>\n
3. Read up on investments<\/p>\n
People who are more clued up about stock markets are generally more comfortable with taking on financial risk. Reading articles or watching videos on the subject could help to boost confidence. If you\u2019re new to investing check out our <\/p>\n
investing for beginners<\/a> section or for more in-depth analysis our <\/p>\n