Invest... don't gamble

I've almost given up reading the financial headlines! It seems as a country we lurch from one crisis to another and any good news about the economy is shortly followed by bad news. The reality is that it's not hard to find headlines as follows: "FTSE 100 turns fall into a 30 point rise," "The FTSE 100 and Asian markets have rallied ahead of the crucial vote.." and gone down, "Poor economic news from US, China, UK and eurozone push shares down sharply, while $8 is wiped off oil price". There are other headlines such as "Stock Markets Rally Ahead ..." and "GBP EUR Rate Drops Further" but, should we really care and does it matter? I guess if you're a day trader and I have met some dentists that are involved in spread betting and FOREX trading then I suppose you might be interested in guessing what's going to happen next. But really you'd be just trying to outwit lots of other City traders. The odds are that sometimes you'd get it right and sometimes you'd get it wrong but the point is you'd be gambling. The point is no-one knows what's going to happen tomorrow with our economy and the resulting effect on the pound, the stock markets or property prices or indeed the effect, if any, on dental practice valuations. Although we do know that the government doesn't have dentists' issues at the top of their priority list at the moment. No doubt there'll continue to be contradictory headlines about how the markets have calmed down or introducing the next financial crisis. Investing in the stock market however does not need to be about gambling. The answer is simply to ignore all the noise announcing the latest ups or downs in the market – this is just what's happening in the short term. The solution is to consider the investment returns that can be made over the long term. A recent Morningstar study looked at investing in the UK stock market over every 10 year period between the months of February 1984 and February 2009. This study showed that over every 10 year period an investor never lost money. To put it another way, had you invested in any one of the 181 possible 10 year time frames you would not have lost money. So assuming you can invest in the stock market and hold on to that investment for ten years or more and are willing to ignore the commentators who think you should sell this tomorrow or buy that now, you'll probably end up making some money. Your main problem then will be how to reduce the tax on the capital gain.