25 February 2025

Investments can go up and down. Over the long term, however, they tend to go up, so you’re more likely to see returns from a longer than a shorter-term investment.

The chart shows the performance of global equities over different time frames between 1999 and 2020.

For example, the left bar shows that the performance of global equities over any 1-year period between 1999 and 2024 ranged between -51% and 79%. For any 10-year period, the returns ranged between -23% and 273%. 

Chart: Performance of global equities

Currency: USD. Source: Bloomberg, HSBC Asset Management, as at 31 December 2024. Indices used: Equities – MSCI AC World Total Return Index. Bonds – Bloomberg Global-Aggregate Total Return Index Value Unhedged USD. 'Diversified’ is a representative, balanced asset allocation across global equities, bonds and alternatives. Bond indices are hedged. Equities are unhedged. Past performance is no guarantee of future returns.

Firstly, set your investment goals. Want to save for a dream wedding or a deposit on a house in 3 years? Or save up to have a family in 10 years? The longer you plan to invest for, the more risk you can take. That’s because you have more room to make riskier investments as the market has a chance to recover from any sharp falls in value.

Lastly, think about which investment types might be suitable - the table below shows some of the options for the different timeframes.

The phrase ‘don’t put all your eggs in one basket’ is as true for investing as in the supermarket! Investing in a diverse mix of assets means you’re more insulated from any drops in value. Over time, a well-diversified portfolio of stocks, bonds and other assets has proved itself a winning strategy.

Once you’ve started making a return on your investment, it’s worth thinking about reinvesting your dividends, and harnessing the power of compound interest. All this means is earning interest on your interest. Over time, your money’s rate of growth will accelerate, so time is your ally. The longer you can leave it, the greater the effect.

Don't just chase that hot investment idea you’ve heard about. Always do your own analysis on a company before investing your hard-earned money. Regardless of the source, never accept a stock tip as valid. And stick to the investment horizon principles above when assessing how much risk to take. Rather than panic over short-term movements, it’s better to track your portfolio’s big-picture trajectory.

It’s important to differentiate 'real losers' from 'bad performers'. Stocks that do well over time but which have had a bad week – or even a bad year – are probably worth holding onto. If a stock looks like it’s on a long-term downward trajectory, it could be time to cut your losses and move on.

A long-term investment strategy doesn’t have to mean picking a fund and then doing nothing with it. Although ‘passive' investing can be a good strategy for many people, ‘active’ investing means taking investment opportunities and adjusting your strategy for long-term growth.

Cash and cash equivalents (like certificates of deposits) still may act as a 'safe haven' when markets are volatile, but holding too much comes at a cost, because the saving rate is still well below the inflation rate.