Economic unrest risks investors making poorly-timed decisions, but research shows it has historically been more fruitful to stay invested than make any reactive moves. Nearly a quarter (24%) of investors have sold at a loss in the past 12-months with one in ten (9%) admitting to doing so in the last 6-months, new findings from Alliance-Witan shows. The research, which surveyed 1,000 UK adults with at least £10,000 in investable assets, reveals that nearly six in ten (59%) investors have sold at a loss during their lifetime.
Investors who had sold at a loss did so predominantly because of a fear that the investment performance would fall further (36%). Additionally, many investors sold because they needed cash, with 29% saying they needed it for an emergency and a fifth (20%) needing it for a specific life event or purchase e.g. paying for a holiday or a new car.
A quarter (25%) of those investors surveyed simply felt it was the right decision for that particular investment at the time with more than one in ten (11%) admitting they based their decision on advice given to them by a friend or relative.
In times of political and economic uncertainty it can be tempting to sell rather than stick it out. But studies have shown that patience will usually pay off as markets have traditionally recovered. Previous research from Alliance Witan found that investors who stayed invested could have built a ‘patience pot’ worth as much as £192K over a 30 year period just by holding their nerve.
Mark Atkinson Senior Director, Client Management at WTW, commented: “Selling an investment at a lower value than it was bought can sometimes be unavoidable, but knee-jerk decisions based on short-term market volatility can backfire on returns. With so much uncertainty within the markets today, with tariffs and increased costs impacting organisations across the globe, it’s natural that an investor may be spooked. However, our previous study ‘Profit from Patience’ showed that investors that stayed invested throughout periods of uncertainty would have experienced higher returns over a long-time horizon than those that made reactive decisions. The most important action an investor can take is to ride out the storm, keeping their investments in place.”
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