What is meant by long term savings? I am 54 and want to know an appropriate investing time frame.
15 July 2021
Question by Jennifer
Hello, I really enjoy your website and find it useful and concise. My question is, what is meant by long term savings? I am 54, so what should I consider to be an appropriate time frame for any investment I make, that could supply the best results?
Answered by Anna Sofat
Long term savings are anything above 10 years. However, I’d say 15 years is what I’d class as long term, 5-10 years is medium term, and below 5 is very short term. I wouldn’t advise anyone to invest in the markets for less than 5 years, as you may not be able to deal with the ups and downs of the market effectively.
You mention that you are 54, you may well have pension funds which might need investing for 30-40 years – days when you bought an annuity when you retire are long gone!
What is vital, is to take the emotions out of investing so you can create a strategy that caters for a cash buffer, and that will allow you to deal with emergency expenditure without being forced to sell any of your investments.
The mistake people make is when you are forced to sell early, or when the markets are low, meaning you lose out.
The two variables in investing are risk and time. With long term investing, you can generally go with a high risk approach as the ups and downs become redundant, and therefore the results are a lot better.
Anna is a multi-award winning financial planner and has been advising enterprising women and their families for nearly twenty years. She is highly regarded as ‘the Voice of Women’s Wealth’ and is the founder of the ‘Are You In?’ movement, which seeks to transform the financial sector towards diversity, inclusivity and greater democracy.