If you’re a sporting fan, 2024 has been quite a year. Not only has it seen the UEFA Euros football tournament, the 2024 Olympic Games will be taking place in Paris.
The Olympics, which is considered to be the world's foremost sports competition, will see the globe’s very best athletes and sports people go head-to-head in their discipline, all vying for the coveted ‘gold medal’.
The games, which take place between Wednesday 24 July and Sunday 11 August, will hold 329 races and matches, which includes swimming, cycling, gymnastics, equestrian, boxing and athletics.
While not immediately obvious though, the tournament not only provides three weeks of excitement for sporting fans around the world, it also offers valuable lessons about investing. So with this in mind, read on to discover three.
1. Take a long-term approach
Every Olympic athlete will have prepared for years before they compete for the coveted gold medal. During those years of training, they will have had ups and downs, physical challenges and maybe personal and mental ones as well.
When this happens, they will focus on their long-term goal of competing in the games and maintain their repetitive and often relentless training schedule no matter what. This is often the same with investing, as it’s important to remain committed to a long-term approach, which is why you should always invest for a minimum of five years.
One time taking a long-term approach is particularly important is when the markets become jittery. All too often, investors focus on the market’s short-term movements and get cold feet, which in turn results in a knee jerk reaction to sell up in the hope of avoiding further losses.
The risk with doing this, however, is that you turn a paper loss into an actual one and deprive your money of any chance of recovery when the stock market bounces back – which it’s tended to do historically. Typically, the best policy is to try to remain calm, stay invested and concentrate on your long-term financial objectives.
To demonstrate this, you might want to consider the following illustration, which shows the performance of the MSCI World Index between July 2019 and the end of June 2024. The Index tracks a basket of large and mid-sized companies across 23 developed countries.
Source: MSCI Index
As you can see, broadly speaking the index rose significantly during the period, although in 2020, it suffered a major downturn due to the Covid pandemic. If you had sold your investments at the time, you would have locked in these losses and deprived your money of the opportunity to recover its losses – and make further growth – when the index later rallied.
Please remember that past performance is no guarantee of future performance, and you may get back less than you initially invested.
2. Focus on your long-term goals
It takes years for the world’s greatest athletes to reach the standards needed to represent their country at the Olympics. Central to this is a commitment to years of repetitive training so that they can reach the highest levels of performance and compete against the World’s best.
To get through their punishing training schedule, they will remain focused on their long-term goal of winning a gold medal at the world’s most prestigious sporting event. This means that even when times get tough, athletes can dig deep and remain committed to their gruelling training plan.
This ability to concentrate on the long-term goal can also pay dividends when investing. Successful investors understand that as the stock market is not a ‘get-rich-quick’ scheme, it can take years for the investment to fulfil their growth potential.
Having the ability to focus on your long-term goals means you’re more likely to stick with your investment when the markets become shaky. Because of this, you’re more likely to remain invested when many other investors make knee-jerk decisions to sell, which in turn, could help you to achieve greater long-term growth.
3. Work with professionals
Ask any Olympian, and they’ll tell you that their success is as much about working with experts as it is about their natural ability to compete at the highest levels. Like every sportsperson at the top of their game, Olympians rely on a wide range of experts to help them to boost their performance.
This includes nutritionists who can increase the Olympian’s stamina through a better diet, or specialist trainers that help build muscle groups to enhance strength, speed, endurance and agility.
This in turn can make the difference between gold, silver or bronze on the day. Similarly, working with experts could help investors to get better results.
As financial advisers typically have extensive knowledge and experience, they’ll help you to understand the markets and how best to boost your potential returns. By demystifying investing and stock market movements, you’ll be better placed to make decisions that you’ll thank yourself for later on.
Additionally, financial advisers can also ensure that your investment maximises potential growth while remaining at a level of risk you’re comfortable with.
That said, the expertise of financial advisers is not limited to investments, as they can also help ensure your earnings and wider wealth are as tax efficient as possible, Furthermore, they can help you to protect your wealth from the unexpected, meaning you’re better placed to maintain your lifestyle no matter what life throws at you.
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If you would like to find out how we could provide you with excellent advice and a service that’s worthy of a gold medal, please speak to one of our advisers or contact us on 01527 577775.