Why we need a little patience

In volatile markets it’s easy to get spooked and sell your investments. But that could cost you many thousands of pounds. A patient approach can be much more rewarding.

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When turbulence in financial markets starts making news headlines, it’s easy for investors to get spooked. But if you’re tempted to sell your investments at difficult moments, remember the advice of Warren Buffett. One of the world’s most famous investors once observed: “The stock market is a device for transferring money from the impatient to the patient.”

Data from Alliance Trust – an investment trust launched in 1888 and therefore well-schooled in the benefits of taking the long-term view – offers a stark example of why Buffett’s counsel makes so much sense. Impatient investors can end up thousands of pounds worse off – and the damage done by impatience increases over time.

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Disclaimer

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Disclaimer

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Disclaimer

1. The Profit from Patience Report, Alliance Trust, September 2022. About the research: Model based on two investors each making an initial stake of £10,000 in Alliance Trust in 1992 and then adding 10% of the average national salary every month afterwards. The Patient investor remains in the market throughout, while the Impatient investor sells 25% of their holdings whenever the market dips 5% in a single day and buys back in when the market recovers 10% in a single day using cash accumulated from monthly contributions, previous redemptions, and accrued interest. NB: The model uses the Alliance Trust share price as a proxy for the market.

Disclaimer

Read the study here: https://www.alliancetrust.co.uk/patience Source: Alliance Trust

Disclaimer

2. Alliance Trust conducted a survey via Opinium Research, who surveyed 2,000 UK adults between 23 and 26 August 2022. Of these, 730 were investors (defined as having a Stocks & Shares ISA, a general investment account, and/ or a self-invested/ self-managed personal pension).

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