The value of long-term investing

Timing the market vs ‘Time In’ the market

Reacting to market movements is natural, especially during periods of uncertainty. However, attempting to time the market,,buying low and selling high, remains extremely difficult and rarely successful. Missing just a handful of the market’s best days can significantly impact long-term returns. For example, in 2025, the FTSE 100 posted its best annual return since the global financial crisis recovery, gaining 21.5% from the last trading day of 2024 to December 31, 2025, outperforming many global peers.

Periods of volatility often coincide with sharp rebounds. Investors who exit during downturns risk missing these recoveries. The lesson: ‘Time in the market’ is far more important than ‘timing the market.’

The importance of time in the market

Spending time in the market is more likely to give you good returns over the long-term. Investment decisions should be based on the long-term fundamentals, rather than short-term market volatility.

Of course this means experiencing the bad days as well as the good days, but markets and wider economies have a tendency to go up over time. This applies to everything from share prices to the price of goods. Successful investing requires patience and taking a long-term view and being comfortable riding out the short-term ups and downs for the chance of a much better return over longer periods of time.

Over the past year, global equity markets have delivered strong returns:

• MSCI World Index: Up 18.94% over the past 12 months, with a total return of 22.35% in 2025.
• FTSE All-Share Index: Up 19.41% in 2025, closing at 5,358.12 on 2 January 2026.
• FTSE 100: Up 21.5% in 2025, closing at 9,931.38, repeatedly setting new all-time highs.

These figures highlight the power of staying invested, even through turbulent times.

The power of compounding

Compounding remains a cornerstone of long-term investing. Reinvesting dividends and allowing returns to accumulate over time can dramatically increase wealth. As Einstein famously said, “Compounding is the eighth wonder of the world.” The snowball effect of compounding is best realised by maintaining a long-term perspective and resisting the urge to react to short-term market noise.

The benefit of long-term investing - An example

The power of this historical upwards trend can also be seen if you consider a fictional investor who invested at the worst possible times over the last 30 years and still made a profit, based on the performance of the MSCI World Index (assuming each investment was made on the day of the nearest market peak).

If they had invested £10,000 into the global stock market at the peaks before each of the following events:

• Black Monday in 1987.
• The Dotcom bubble bursting in 2001.
• The Global Financial Crisis in 2007.
• Black Monday in 2011.
• The Chinese stock market crash in 2015.
• COVID-19 Pandemic 2020.

Their original £60,000 investment (£10,000 prior to each event) would today be worth approximately £350,000 – growth of just nearly £290,000!

Of course, past performance is not a reliable indicator of future performance, but it demonstrates how strongly markets have risen over the long-term, even if you had invested at the worst possible times.

[Source: FE Analytics, measuring the Total Return of the MSCI World Index to 31.12.2025].

Recent trends and best practices in long-term investing

• Diversification: 2025 rewarded diversified portfolios. Gold (+65%), emerging market equities (+31%), and developed markets ex-US (+28%) outperformed the S&P 500 (+16%).
• Global exposure: Relying on a single region can create unnecessary risk. Global diversification helps mitigate this.
• Digitalisation & AI: The rise of robo-advisors and AI-driven investment platforms is transforming portfolio management, offering tailored strategies and improved efficiency.
• Regulatory changes: The UK has introduced new Consumer Composite Investments (CCIs), replacing EU PRIIPs, to improve cost transparency and product disclosure for investors.
• Sustainable investing: ESG and climate-focused investments continue to gain traction, with investors increasingly considering environmental and social factors in their portfolios.

What we do at Crowe

At Crowe we believe in the power of investing for the long-term and have a consistent investment philosophy and process that feeds into all of our client portfolios.

The key aspects of our investment philosophy include:

• Taking a long-term view - analysing the fundamentals rather than being swept up by short-term market noise.
• Looking for investments that can grow over time - we let time do the heavy lifting for us and in particular, the power of compounding.
• Looking at real returns - after the effects of inflation, fees and, critically, tax.
• Ensuring emotions or cognitive biases do not cloud our judgments.
• Recommending appropriate diversified portfolios - that provide the potential for good returns commensurate with the level of risk you are prepared to take.

To quote the great American investor and business tycoon, Warren Buffet ‘our favourite holding period is forever’.

Please note the information contained is correct as at the date of this article.