The stock market
Stock markets can be volatile, and investors should accept there may be ups and downs along the way.
Shares can both rise and fall in value and you’ll probably know they have sometimes suffered very big falls.
But if you wonder whether it’s really worth investing in shares, the longer-term view of the stock market shows your investments can reap benefits.
The chart below shows how the UK stock market has risen and fallen in value between 1973 and 2006, and the different events which may have contributed to these movements.
Shares have periods when they have risen steadily in value, and they’ve also seen some sharp falls along the way. However, over the long term, shares have tended to rise.
Thirty-eight years on the London stock market
What will happen next?
No-one – not even professional fund managers – knows which direction the stock market will take next.
But remember, depending on how long you have until you retire, you could be invested for 20, 30 or 40 years. As the graph shows, that has been long enough to ride out short-term falls in the market – although there’s no guarantee that will be true in the future.
So, if you think the stock market could rise substantially between now and when you retire, it may be wise to hold stock market-based investments as part of your pension.
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J.P. Morgan market views
Investment director Edmund Brandt offers his analysis of market news and events across world stock markets and assesses future prospects for the global economy.