Why Staying Invested Is Almost Always the Right Call
Investment Insight
Markets will always have difficult moments. But history consistently shows that the investors who hold their nerve – and stay invested – are the ones who come out ahead.
When markets fall, it is natural to feel uneasy. Headlines turn negative, portfolios dip, and the temptation to “do something” – move to cash, wait for things to settle – can feel overwhelming.
But if history teaches us anything, it’s this: reacting to short-term noise is one of the most costly things a long-term investor can do. Here’s what the evidence actually shows.
Markets have always recovered
Over the last 30 years, global equities have delivered an average return of close to 9% per year – including dividends reinvested. That’s not a smooth ride. It includes some of the most dramatic market events in modern history. But in every case, markets recovered and went on to reach new highs.
2000–03
The Dot-Com Crash The tech bubble burst, wiping out hundreds of internet companies and triggering a prolonged market decline.
Recovered in ~6.5 years
2007–08
Global Financial Crisis The most severe financial shock since the Great Depression, triggered by the collapse of the subprime mortgage market.
Recovered in ~2.5 years
2020
The Covid-19 Crash A sudden global shock sent equities down over 15% in a single quarter as the pandemic brought the world to a standstill.
Recovered in ~1.5 years
2022
Russia-Ukraine & Mini-Budget Geopolitical uncertainty combined with domestic economic turbulence created a sharp but short-lived correction.
Recovered in ~0.4 years
2025
US Tariff Announcements Broad tariff measures sparked fears over global trade and inflation, causing sharp short-term volatility across global markets.
Recovered in ~0.1 years
Notice the pattern? Not only has every major sell-off been followed by a recovery – the recoveries have tended to get quicker over time. The financial crisis took two and a half years. The tariff shock of 2025 took barely a month.
“In 75% of recessions since the 1940s, markets performed broadly the same or better during the recession than in the 12 months prior – and returned an average of 23% in the year that followed.”
The longer you stay invested, the lower the risk
One of the most compelling arguments for long-term investing is simply the maths of holding periods. Analysing global equity markets over the past 30 years reveals a striking picture.
11% chance of a negative return if you stayed invested for 5 years
~0% chance of a negative return over any 20-year holding period
Compare that to holding for just one day, where there’s almost a 50/50 chance of a loss. The passage of time is, in itself, one of the most powerful risk management tools available to any investor.
Cash isn’t the safe haven it feels like
Moving to cash during a market downturn feels safer. For long-term investors, it rarely is. Over the 30 years to December 2025, here is how the three main options compared on an annualised basis:
Inflation 2.4%
The baseline your money needs to beat just to stand still in real terms.
Cash 3.0%
Outpaced inflation – but only by 0.6% per year. Very little real growth over three decades.
Global Equities 7.3%
Outperformed cash by almost 350% in total – or just over 4% per year above cash returns across the same period.
And when you look at what happened to a £100,000 investment made at the start of the Covid crash in March 2020, the contrast becomes very clear. An investor who stayed in a diversified portfolio saw their investment grow to around £166,000 by the end of 2025. An investor who moved to cash ended up with around £104,000 – a difference of roughly 60%.
You cannot afford to miss the best days
Some of the best single days in stock market history have come immediately after the worst. The largest single-day gain in global equities over the past 30 years – a rise of +6.8% – came on 13th October 2008, right in the middle of the financial crisis, after six consecutive days of heavy losses. If you had moved to cash during those six bad days, you would have missed it entirely.
Fully invested · 30 years £120,000
Value of a £10,000 investment held throughout from 1995 to 2025. Annualised return: 8.7% p.a.
Missed just 30 best days £33,000
The same investment, having sat out just 30 days over 30 years. Annualised return: 4.1% p.a.
Missing less than 0.3% of the available trading days more than halved the final outcome. You cannot reliably avoid the worst days without also missing the best.
What this means for you
Your portfolio should always reflect your goals, your time horizon, and how much short-term volatility you can reasonably absorb. But the evidence is consistent: reacting emotionally to short-term market movements is one of the most damaging things a long-term investor can do.
Five things to remember when markets are volatile
Every major market crash in modern history has been followed by a recovery. Time is your most powerful ally.
The longer you stay invested, the lower your statistical risk. Over any 20-year period, global equities have never produced a negative return.
Moving to cash might feel safe – but over time, equities have outperformed cash by nearly 350%. Sitting on the sidelines has a real cost.
The best days and the worst days tend to happen close together. You cannot reliably avoid one without missing the other.
A well-diversified portfolio, matched to your goals and time horizon, is your best defence against short-term volatility.
If you have any concerns about your investments, or if your circumstances have changed and you’d like to review your plan, we’re always here to talk. That’s exactly what we’re for.
Free Download Why Staying Invested Is Almost Always the Right Call 4-page guide · PDF · MPA Financial Management
The value of investments and any income from them can fall as well as rise. You may get back less than you originally invested. Past performance is not a reliable indicator of future results. This article is for information purposes only and does not constitute personal financial advice. Data sourced from Morningstar and Hymans Robertson Investment Services (HRIS), covering the period to 31 December 2025. If you have questions about your own financial plan, please speak with your adviser.
When markets fall, it is natural to feel uneasy. Headlines turn negative, portfolios dip, and the temptation to “do something” – move to cash, wait for things to settle – can feel overwhelming.
But if history teaches us anything, it’s this: reacting to short-term noise is one of the most costly things a long-term investor can do. Here’s what the evidence actually shows.
Markets have always recovered
Over the last 30 years, global equities have delivered an average return of close to 9% per year – including dividends reinvested. That’s not a smooth ride. It includes some of the most dramatic market events in modern history. But in every case, markets recovered and went on to reach new highs.
The tech bubble burst, wiping out hundreds of internet companies and triggering a prolonged market decline.
The most severe financial shock since the Great Depression, triggered by the collapse of the subprime mortgage market.
A sudden global shock sent equities down over 15% in a single quarter as the pandemic brought the world to a standstill.
Geopolitical uncertainty combined with domestic economic turbulence created a sharp but short-lived correction.
Broad tariff measures sparked fears over global trade and inflation, causing sharp short-term volatility across global markets.
Notice the pattern? Not only has every major sell-off been followed by a recovery – the recoveries have tended to get quicker over time. The financial crisis took two and a half years. The tariff shock of 2025 took barely a month.
“In 75% of recessions since the 1940s, markets performed broadly the same or better during the recession than in the 12 months prior – and returned an average of 23% in the year that followed.”
The longer you stay invested, the lower the risk
One of the most compelling arguments for long-term investing is simply the maths of holding periods. Analysing global equity markets over the past 30 years reveals a striking picture.
chance of a negative return if you stayed invested for 5 years
chance of a negative return over any 20-year holding period
Compare that to holding for just one day, where there’s almost a 50/50 chance of a loss. The passage of time is, in itself, one of the most powerful risk management tools available to any investor.
Cash isn’t the safe haven it feels like
Moving to cash during a market downturn feels safer. For long-term investors, it rarely is. Over the 30 years to December 2025, here is how the three main options compared on an annualised basis:
2.4%
The baseline your money needs to beat just to stand still in real terms.
3.0%
Outpaced inflation – but only by 0.6% per year. Very little real growth over three decades.
7.3%
Outperformed cash by almost 350% in total – or just over 4% per year above cash returns across the same period.
And when you look at what happened to a £100,000 investment made at the start of the Covid crash in March 2020, the contrast becomes very clear. An investor who stayed in a diversified portfolio saw their investment grow to around £166,000 by the end of 2025. An investor who moved to cash ended up with around £104,000 – a difference of roughly 60%.
You cannot afford to miss the best days
Some of the best single days in stock market history have come immediately after the worst. The largest single-day gain in global equities over the past 30 years – a rise of +6.8% – came on 13th October 2008, right in the middle of the financial crisis, after six consecutive days of heavy losses. If you had moved to cash during those six bad days, you would have missed it entirely.
£120,000
Value of a £10,000 investment held throughout from 1995 to 2025. Annualised return: 8.7% p.a.
£33,000
The same investment, having sat out just 30 days over 30 years. Annualised return: 4.1% p.a.
Missing less than 0.3% of the available trading days more than halved the final outcome. You cannot reliably avoid the worst days without also missing the best.
What this means for you
Your portfolio should always reflect your goals, your time horizon, and how much short-term volatility you can reasonably absorb. But the evidence is consistent: reacting emotionally to short-term market movements is one of the most damaging things a long-term investor can do.
Five things to remember when markets are volatile
Every major market crash in modern history has been followed by a recovery. Time is your most powerful ally.
The longer you stay invested, the lower your statistical risk. Over any 20-year period, global equities have never produced a negative return.
Moving to cash might feel safe – but over time, equities have outperformed cash by nearly 350%. Sitting on the sidelines has a real cost.
The best days and the worst days tend to happen close together. You cannot reliably avoid one without missing the other.
A well-diversified portfolio, matched to your goals and time horizon, is your best defence against short-term volatility.
If you have any concerns about your investments, or if your circumstances have changed and you’d like to review your plan, we’re always here to talk. That’s exactly what we’re for.
Why Staying Invested Is Almost Always the Right Call
4-page guide · PDF · MPA Financial Management
Download PDF
The value of investments and any income from them can fall as well as rise. You may get back less than you originally invested. Past performance is not a reliable indicator of future results. This article is for information purposes only and does not constitute personal financial advice. Data sourced from Morningstar and Hymans Robertson Investment Services (HRIS), covering the period to 31 December 2025. If you have questions about your own financial plan, please speak with your adviser.