The ability to remain unemotional is key to successful long-term investing.

We know that markets rise and fall daily and you’ll have heard us speak before about the dangers of knee-jerk reactions when markets dip.

But investing your hard-earned money during an “all-time high” might require you to take an objective step back too. When markets are high, it’s understandable that you might be nervous about an imminent fall. But should you be?

A recent report from Schroders has found that during the last 98 years, the markets have been at an all-time high for 30% of the time.

Highs, then, aren’t new, or even that rare. Keep reading to find out what they mean, if anything, for how and when you invest.

Market all-time highs account for nearly a third of all months since 1926

The above report looked at the US stock market each month since 1926. It found that 354 of 1,176 month-ends were recorded as all-time highs, accounting for nearly a third (30%) of that period.

It’s only natural to get nervy when markets reach an all-time high because a peak is likely to be followed by a fall. But all-time highs are more frequent than you might imagine and help to explain the market’s general upward trend.

While you might believe that selling units during a high will consolidate gains and allow you to buy back when the markets fall, this kind of timing the market can be dangerous.

The report goes on to look at $100 invested in the US stock market from January 1926. The illustration imagines the effect of moving invested funds into cash each time a month ends is recorded as an all-time high. The money stays in cash for the next month before being reinvested and transaction costs are excluded.

Source: Schroders

As you can see, a knee-jerk reaction to all-time highs could detrimentally affect your investment over the long term.

In the above extreme example (and in inflation-adjusted terms), $100 kept in the market throughout the 98 years was worth $85,000 by December 2023, growth of 7.1% a year (calculated as a compound annual growth rate).

A switching strategy that looked to time the markets, meanwhile, would only be worth $8,790, a return of 4.7% in inflation-adjusted terms. This is a difference of around 90%.

Your long-term investment is designed to reach your goal, in your time frame, within your tolerance for risk

At Boolers, we understand that you are an individual with your own unique set of circumstances and reasons for investing.

That’s why the portfolio we help you put in place will be tailored to your aims, objectives, and risk profile.

You might be looking to extract an income, grow your capital, or a combination of both. Investing is always a long-term proposition but understanding your exact timescales is important. As is thinking about the level of risk you are willing to take, and your capacity for loss.

Once your diversified and risk-managed portfolio is in place it’s important to focus on your goals and remember a few investment basics:

1. The general trend of the market is upward

Over the 1,176 months between January 1926 and December 2023, 354 have been recorded as all-time highs. And while past performance is no indication of future success, figures show that the markets generally trend upwards.

Keeping your money invested even during all-time highs means that your funds will still be there to experience the next high, and the one after that.

Remember the age-old adage: it’s time in the markets, not timing the market that counts.

2. Investing is a long-term proposition so stay focused

Your investment goal is long term exactly to ride out periods of short-term volatility and to take advantage of the long-term upward trend.

That means that staying focused on your end goal is key. Your risk profile and your priorities are allowed to change, but if your overall goal hasn’t, then your strategy needn’t either.

Whether markets are at an all-time high or in a sudden trough, avoiding emotional, knee-jerk reactions is key.

3. Take advice from the experts

At Boolers, we have 40 years of experience dealing with global markets and investment portfolios.

Our investment strategy is defined and transparent, and we are truly independent. This gives us – and more importantly, your money – access to the full fund universe.

We also meet regularly with fund managers, and with you, to ensure your plans remain on track, whatever is happening in the wider world of global finance or politics.

Get in touch

If you’d like help managing your investment portfolio, or you have questions about any other aspect of your long-term financial plans, get in touch. Contact us now to see how our team of dedicated financial professionals can help you.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.