As we have seen in our previous post, the media and polled experts have a habit to make assumptions about the future. But as we outlined, unexpected things can and do happen – wars, pandemics, inflation, recessions – that mess up even the most carefully considered projections.
For the ordinary investor, the lessons here are familiar. The future is inherently uncertain. Not even the experts are particularly good at predicting it. This means that basing your investment strategy on somebody’s opinion, hunch, or wishful thinking about what might happen next year or the year after is not a sustainable or reliable investment approach.
The good news is that you don’t need the powers of prediction to have a good investment experience. You just need a financial plan that is made for you and your goals, one that is highly diversified and that makes allowances for periods like we have seen in 2022.
We know that over the long term, the share market has delivered a solid rate of return, but it is not the same every year. Some years are much worse, some years are much better. So to get that average you need to stick with it.
You are absolutely right; humanity faces some challenges at the moment. But the flip side of challenge is opportunity and the chance to create innovative solutions to the problems we currently face. Being a long-term investor gives you the chance to share in the wealth created by such innovation.
And you can do all of that without making a forecast.