Interactive Investor

‘Time is money’ is true of the coronavirus lockdown and investing

Money Observer’s Prudent Parent on parenting during the pandemic and the value of long-term investing.

20th May 2020 13:49

Kyle Caldwell from interactive investor

Money Observer’s Prudent Parent on parenting during the pandemic and the value of long-term investing.

A phrase famously attributed to Benjamin Franklin – “remember that time is money” – has been doing the rounds on social media during the coronavirus lockdown. Rather than sit on its collective backside, the nation has been urged by some, namely businesses with online courses and therefore vested interests, to make the most of being housebound by learning a new skill.

As the father of a two-year-old, I am clearly not the target market – although, alongside other parents across the country I have been learning new skills, chief among them juggling two full-time jobs, as deputy editor of Money Observer and a full-time parent.

My partner and I have also been embracing Benjamin Franklin’s wise words, but through a different lens of interpretation. Given that ‘time is money', we felt it prudent to prepare for lockdown with plans to keep our son entertained and buy ourselves some priceless sit-down time. A swing, mud kitchen and paddling pool were purchased, and in our case it has been money well spent.

In relation to money, the value of time in the investment process is an important concept for investors to grasp, particularly during times when stock markets are highly volatile. As various studies have shown, the longer you invest, the greater your chances of investment success.

- 10 investment funds to buy and hold for 30 to 40 years

For example, recent analysis by Schroders shows there have been 11 occasions in the 148 years between 1871 and 2019 when stocks (as measured by the S&P 500 index) fell by at least 25%. In seven of these 11 occasions, investors would have seen their losses recouped in two years or less. In the worst case, the Great Depression of the 1930s, when investors lost over 80% of their money, it took 15 years for investors to make their money back.

Given that I am investing for the long term, with the objective of using the proceeds to give my better half everything that she desires (a second bathroom), the stock market falls are an opportunity to buy ‘low’, rather than sell ‘low’ and crystallise losses.

This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.

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