Difficulties Faced When Investing in the Long Term

by Matt

in Investing

Put simply, now isn’t a good time to be young. With the majority of people now living longer than ever before, the retirement age is increasing, and there’s a good chance that people may have to work for an extra seven years before they retire. The younger you are, the bleaker the picture looks, and it appears increasingly likely that you’ll have to work for longer than ever before.

One way that this can be countered is through successful long term trading. This, however, is not without difficulties. In this post, we take a look at these difficulties and suggest ways they can be navigated.

Gains Lessened

According to a recent report, investors of all ages may need to resign themselves to diminished gains.

According to this theory, the last 30 years or so can be seen as a “golden era” for investors due to inflation adjusted rates influenced by factors that are unlikely to be repeated, such as falling inflation and interest rates, swelling corporate profits and expanding price-earnings ratios in the stock market.

As such, it is recommended that investors lower their sites and reassess their strategies to reflect this realignment. This is because the economic and business drivers of equality and fixed-income returns are shifting, meaning that:

-        Inflation is likely to rise

-        Interest rates will increase from their historic lows

-        Employment will weaken because productivity gains will not strengthen

-        Emerging markets could cut margins

All of this means that the next decade or so won’t be anywhere near as lucrative for investors.

Opportunities for Growth Still Exist

However, in spite of the negativity surrounding the forthcoming decades, a number of opportunities still exist in the markets.

For example, if growth slows, the GDP of the United States should grow by around 1.9 per cent per year, leading to a number of investment opportunities emerging.

If the economy recovers as many predict it will, US growth should also match the 2.9 per cent average of the last 30 years, with non-US GDP rising by as much as 3.4 per cent.

Due to this, it is apparent that opportunities will still exist, you’ll just have to be more realistic in your expectations. In spotting these reduced opportunities, doing your research will be the key.

As such, you should invest in your education. By using a respected broker like ETX Capital, not only will you be able to use a bespoke platform, but you’ll get free education, too. This way, you’ll be able to spot opportunities before anyone else.

Related Posts on Gen Y Wealth

Leave a Comment

Previous post:

Next post: