Skipton FS says "stock market still the place to be"

Investors need to remain focussed on the long-term and not lose faith in the stock market, says Skipton Financial Services.

Despite a record ISA season for cash ISAs with 3 in 4 playing it safe, investors need be wary that being out of the market for any length of time will mean them missing out on the potential long-term growth that cash accounts simply can't offer.

£10,000 invested in a typical cash account three years ago would now be worth £10,939 or 3.1% pa. This compares to £12,120 or 6.6% pa if invested in the Schroder Multi-Manager Cautious Managed Account, one of the top funds in the IMA Cautious Managed sector. Taking a bit more risk with one of the best from the Balanced Managed sector - Jupiter Merlin Growth Portfolio Account - would have given a return of £12,456 or 7.6% pa, and more adventurous investors in the New Star Active Portfolio Account, one of the pick of the Active Managed sector, would now have £13,584 or 10.7% pa (Source: Lipper, produced using Hindsight 5).

Simon Holt, managing director of Skipton Financial Services, commented, "Despite a turbulent last 12 months which has sapped the confidence of many investors, even over the last three-year period, these figures show the stock market has yet again been the place to produce the best returns. This proves again the adage that, although there will be fluctuations, equities are the place to be over any medium to long-term timeframe. No one knows exactly what will happen this year but, one thing for certain is, it is time in the market, not timing the market which is the decisive factor.

Holt continued, "It is understandable that the financial events of the last year have made many people feel less comfortable with their investment performance now than a year ago, but pulling out of the market now will only crystallise their losses. The FTSE 100 has a history of big bounce-backs - it fell 31.5% from its peak after Black Monday but was up 121% from its trough five years later - so people need to sit tight and remember a stock market investment is one for the medium to long-term. For stock market investments, it is the performance after five years plus, not after one or two years, that matters. People who have played safe and built up cash ISA investments over the last few years should consider using the new freedom to transfer cash ISAs into stocks and shares ISAs, allowing their funds to achieve their long-term goals in a way that cash can't."