THE HIGH COST OF CASHING OUT
JANUARY 2023
Why disinvesting and moving into cash could cost you in the long term.
Timing the stock market is next to impossible. No one knows exactly what markets will do, but it’s important to remember that the best and worst trading days often happen close together.
Why staying invested now could benefit you in the future:
• History tells us that over the long term, equity returns are significantly higher than cash
• Cash rates may seem more attractive now, but with inflation running at just below 11%, cash is still delivering negative real returns
• Moving to cash means you cannot participate in any market recovery, which often follows a market fall
• Equity markets have historically recovered from a downturn to deliver positive returns in excess of inflation
The below chart shows how over the last 5 years the stock market has continually delivered positive returns after a downturn, and why moving to cash could cost you in the long term.
Source: Lipper for Investment Management
Date of data: 22/11/2017 – 30/11/2022
A – MSCI World TR in GB
B – UK Consumer Price Index TR in GB
C – Bank of England Base Rate TR in GB
Tavistock Asset Management Limited is authorised and regulated by the Financial Conduct Authority with FRN 955719. Tavistock Asset Management Limited is a wholly owned subsidiary of Tavistock Investments Plc. This content is for financial intermediaries, it is not aimed at the general public. This document is published and provided for informational purposes only. The information contained within constitutes the author’s own opinions. Tavistock Asset Management do not provide financial advice. None of the information contained in the document constitutes a recommendation that any particular investment strategy is suitable for any specific person. Source of data: Bloomberg, Titan Asset Management unless otherwise stated. Registered address, Tavistock Asset Management, 1 Queen’s Square, Ascot Business Park, Lyndhurst Road, Ascot, Berkshire, SL5 9FE.
