Insight

The Importance Of Investing Early

AGT, AVI May 2023 Asset Value Investors

It’s a humdrum message, but building long-term wealth through stock market investments is about repeating a few good practices over many years. In reality, regular investing, as early as possible, in order to make the most of compounding dividends and capital growth, is likely to be far more important for the growth of your savings than finding the latest hot stock.

With that in mind, getting started earlier rather than later in each tax year gives you the advantages of dividends and capital growth for longer, while also building good investment habits. This allows compounding to work its magic and may be particularly important when investing when markets are lower, as they are today.

Why it matters

This has been the advice dished out by wealth managers for decades and it’s worth exploring why it works so well in practice. The first consideration is dividends. The FTSE All Share currently has an average dividend yield of 3.6%1, while a dedicated UK or global equity income strategy may pay 4-5%.

Compounding those dividends over time is a powerful way to grow your wealth. Each dividend is reinvested back into your portfolio, which buys more investments, which generate more dividends. The earlier you invest in each tax year, the earlier you start accumulating these dividends. On a £100,000 portfolio, an investor might get £5000. Over 20 years, that builds up to £13,560. Leave it a year and it’s just £12,900. These small wins add up over time.

The same rules apply to capital growth. The earlier you invest in each tax year, the earlier you benefit from any capital growth. While this doesn’t always work – investors may be scarred by their experiences in 2022 – historically, the stock market has gone up in more years than it has gone down. That includes eight out of the most recent 10 years for the FTSE All Share. Again, this growth will compound for longer, creating a larger savings pot over time.

Finding the best days

There are other, less intuitive, reasons that investing early may benefit you. It is a quirk of markets that its strongest moments tend to be concentrated in just a handful of days. The most recent JP Morgan Long Term Capital Markets Assumptions report2 found that missing the best 10 days in markets over the last 20 years would have reduced an investor’s annualised return from 9.76% to 5.56%. Miss the best 20 days, and the annual return drops

to just 2.94%, while losing the best 30 days leaves an investor with an anaemic 0.79% per annum.

It is fiendishly difficult to predict when those days might occur. While it would be logical that the market bounces higher when the economic environment improves, this is seldom the case in practice. After the global financial crisis, the market started to turn in March 2009. At the time, the economy was still in recession and did not recover until the third quarter of that year. Similarly, the strong rally in 2020 came when there was still little clarity on the outcome of the pandemic, and there was no sign of a vaccine.

The JP Morgan report found that seven of the 10 best days in markets occurred within fifteen days of the 10 worst days. You can never be certain when markets are going to recognise mispricing and adjust. When a turn in markets comes, it can be very quick and totally unexpected. Investing early in the tax year gives you the best chance of being invested on those winning days.

Markets today

This sound investment practice applies whatever the prevailing market conditions, but is particularly important when markets have been through a period of volatility and prices are lower. By investing early and regularly, you can ensure you are positioned for the turn in markets when it arrives.

This phenomenon is not just visible for the stock market are a whole, but also for individual sectors, regions and styles. At the moment, we would highlight the valuation differential between ‘growth’ stocks – those companies with high, long-term, revenue growth – and the rest of the market.

While investors have focused on exciting, fast-growth companies such as the US technology mega-caps such as Amazon and Facebook; other, less fashionable sectors have been left behind. This made some sense in a lower interest rate environment, which favoured companies with long-term revenue growth over the strong cash flows and dividends today. However, it’s meant that a lot of good companies were left behind.

As interest rates rose in 2022, investors have tentatively started to pay attention to these unloved parts of the market again, but the valuation gap between technology and, say, financials or some consumer-facing companies, is still a long way from historic norms. Our experience suggests that having shown little interest in an unfashionable sector, markets will suddenly cotton on to its value and share prices can move very quickly. The importance of not missing a handful of days in the market is more acute with a value approach than with other strategies.

Our conclusion? Investing early in the tax year is always important, giving investors the best possible chance of compounding their income and capital growth. However, it is particularly important today, given the weakness seen in markets over the past 12 months. It is also

important in those parts of the market that have been left behind over the past decade and are poised for a recovery

Why invest with AVI Global Trust?

The AVI Global Trust looks for high-quality companies that are undervalued by the market but hold long-term potential. Over time, these businesses should benefit from improving financial results and a reappraisal by investors, driving share prices higher. It is an approach that takes patience, but has proved successful in a range of market conditions over time.

Please confirm your country of origin:
Disclaimer

The content of this website is issued by Asset Value Investors Limited (“AVI”), 2 Cavendish Square, London W1G 0PU.  AVI is authorised and regulated by the Financial Conduct Authority of the United Kingdom (the “FCA”) and is a registered investment adviser with the Securities and Exchange Commission of the United States. While the Investment Manager is registered with the SEC as an investment adviser, it does not comply with the Advisers Act with regard to its non-U.S. clients.

To the extent that material on this website is issued in the UK, it is issued for the purposes of the Financial Services and Markets Act 2000

Intended Audience
The information on this website is provided to you for informational purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced on this website. The information on this website is subject to change without notice.

It is your responsibility to observe all applicable laws and regulations of any relevant jurisdiction.

This website is primarily intended for United Kingdom (“UK”) residents. It is not intended for distribution to, or use by, any U.S. persons or persons in any other country where such distribution, publication or use would be contrary to local law or regulation or in which AVI does not hold any necessary licence or registration. Individuals or entities in respect of whom such prohibitions apply, must not access or use the AVI website.

No Tax or Legal Advice
Nothing on this website constitutes investment, legal, tax or other advice nor should it be relied upon in making an investment decision.

Money Laundering
As a result of money laundering regulations, additional documentation for identification purposes may be required when you make your investment. Full details are contained in the relevant subscription documents.

Investment Decisions
As with all financial or investment matters, you should exercise great care in using the information provided on this website or available through links from this website. You should research the facts, opinions and strategies mentioned in this website before making any financial investment decisions. If you are unsure about the meaning of any information provided please consult your financial adviser or other professional adviser.

No Warranty; Limitation on Liability
Whilst all reasonable care has been taken in the preparation of this website, AVI cannot guarantee the accuracy or completeness of such information, either expressly or implied.

Neither AVI, any of its directors, officers or employees, nor any third party vendor, will be liable or have any responsibility of any kind for any loss or damage that you incur in the event of any failure or interruption of this site, or resulting from the act or omission of any other party involved in making this site or the data contained therein available to you, or from any other cause relating to your access to, inability to access, or use of the site or these materials, whether or not the circumstances giving rise to such cause may have been within the control of AVI, or of any vendor providing software or services support.

All information and content on this website is, subject to applicable statutes and regulations, furnished “as is”, without warranty of any kind, express or implied, including but not limited to implied warranties of merchantability, fitness for a particular purpose or non-infringement. We make no warranty as to the operation, functionality or availability of this website, that the website will be error-free or that defects will be corrected.

In no event shall AVI be liable to any indirect, incidental, special or consequential damages arising out of or in connection with the use of this website, the inability to use this site or any products or services obtained or stored in or from this website, whether based on contract, tort, strict liability or otherwise. These limitations also apply to any third party claims against users.

Intellectual Property
Everything on this website is the valuable intellectual property of Asset Value Investors Limited, or their respective suppliers. We protect our intellectual property rights to the full extent of the law.

Copyright Policy
No permission is granted to copy, distribute, modify, post or frame any text, graphics, video, audio, software code, or user interface design or logos.

Hyperlinks
The existence of hyperlinks should not be construed as an endorsement, approval or verification by AVI of any content available on third party sites. By providing access to other websites, we are not recommending the purchase or sale of products or services provided by the website’s sponsoring organization. We do not review any of these third party sites. AVI reserves the right to require written consent for, or request the removal of, any links to our website.

AVI disclaims all responsibility and liability for the content on third party sites.

Security
For your protection, we require the use of encryption technologies for certain types of communications conducted through this website. While we provide those technologies and use other reasonable precautions to protect confidential information and provide suitable security, we do not guarantee or warrant that information transmitted through the Internet is secure, or that such transmissions will be free from delay, interruption, interception or error. You acknowledge and agree that users of this website and users, owners, or managers of third party websites may not: (i) collect or store personal data about other users of this website or (ii) upload, e-mail or otherwise transmit any material that contains viruses or any other computer code, files or programs that might interrupt, limit or interfere with the functionality of any computer software, hardware, database or file, or communications equipment that is owned, leased or used by AVI.

Privacy Policy
We encourage you to read AVI’s Privacy Policy which can be obtained by clicking the Privacy Policy button found on the Homepage.

General Terms
Deliberate misuse of any element of this website including, without limitation, hacking, introduction of viruses or similar code, disruption or excessive use or any use in contravention of applicable law, is expressly prohibited and we reserve the right to terminate your access to the website, and at our discretion, pass information to the legal authorities.

We reserve the right at any time on giving notice to change or modify these terms and conditions or to impose new conditions in respect of this website or to change or discontinue any aspect or feature of this website. We shall be entitled to terminate your access to this website at any time on giving notice to you and in any event if you commit any breach of these terms and conditions. We shall have no liability to you for such termination. Notices may be served by any reasonable method including posting on this website.

You shall indemnify us from and against all actions, claims, proceedings, costs and damages (including any damages or compensation paid by us on the advice of its legal advisors to compromise or settle any claim) and all legal costs or expenses arising out of your use of this e webSite, any breach of any applicable law, statute, ordinace, regulation or third party rights and any breach by you of the software licenses and service agreements governing the software made available to you in connection with this website.

These terms and conditions shall be governed by and construed in accordance with the laws of England without regard to conflicts of law principles. Nothing in these Terms and Conditions will exclude or restrict any duty or liability we may have under applicable rules or regulations.

AVI Global Trust – General Risk Factors
AVI Global Trust plc is a public company listed and traded on the London Stock Exchange. Past performance should not be seen as an indication of future performance. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested. The trust uses gearing techniques (leverage) which will exaggerate market movements both down and up which could mean sudden and large falls in market value. Please refer to the Key Features Document for further details effecting your investment.

Applications to invest in AVI Global Trust referred to on this website, must only be made on the basis of the current Key Features Document, or other applicable terms and conditions. Past performance should not be seen as an indication of future performance. Market and exchange rate movements may cause the value of a fund to rise or fall and an investor may not get back the amount invested.

As a result of money laundering regulations, additional documentation for identification purposes may be required when you make your investment. Details are contained in the relevant application documents.

If you are unsure about the meaning of any information provided please consult your financial adviser or other professional adviser.

By agreeing to these terms, you agree that we may contact you by post, fax, email, SMS messaging or by other forms of electronic media to inform you of our products and services that we believe you might be interested in.

Disclaimer

The content of this website is issued by Asset Value Investors Limited (“AVI”), 2 Cavendish Square, London W1G 0PU.

AVI is authorised and regulated by the Financial Conduct Authority of the United Kingdom (the “FCA”) and is a registered investment adviser with the Securities and Exchange Commission of the United States. While the Investment Manager is registered with the SEC as an investment adviser, it does not comply with the Advisers Act with regard to its non-U.S. clients.

Intended Audience
The information on this website is provided to you for informational purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced on this website.The information on this website is subject to change without notice.

This website is primarily intended for UK residents. It is not intended for distribution to, or use by, any U.S. persons or persons in any other country where such distribution or use would be contrary to local law or regulation.

It is your responsibility to observe all applicable laws and regulations of any relevant jurisdiction.

No Tax or Legal Advice
Nothing on this website constitutes investment, legal, tax or other advice nor should it be relied upon in making an investment decision.

Money Laundering
As a result of money laundering regulations, additional documentation for identification purposes may be required when you make your investment. Full details are contained in the relevant subscription documents.

Investment Decisions
As with all financial or investment matters, you should exercise great care in using the information provided on this website or available through links from this website. You should research the facts, opinions and strategies mentioned in this website before making any financial investment decisions. If you are unsure about the meaning of any information provided please consult your financial adviser or other professional adviser.

No Warranty; Limitation on Liability
Whilst all reasonable care has been taken in the preparation of this website, AVI cannot guarantee the accuracy or completeness of such information, either expressly or implied. Neither AVI, any of its directors, officers or employees, nor any third party vendor, will be liable or have any responsibility of any kind for any loss or damage that you incur in the event of any failure or interruption of this site, or resulting from the act or omission of any other party involved in making this site or the data contained therein available to you, or from any other cause relating to your access to, inability to access, or use of the site or these materials, whether or not the circumstances giving rise to such cause may have been within the control of AVI, or of any vendor providing software or services support.

All information and content on this website is, subject to applicable statutes and regulations, furnished “as is”, without warranty of any kind, express or implied, including but not limited to implied warranties of merchantability, fitness for a particular purpose or non-infringement. We make no warranty as to the operation, functionality or availability of this website, that the website will be error-free or that defects will be corrected.

In no event shall AVI be liable to any indirect, incidental, special or consequential damages arising out of or in connection with the use of this website, the inability to use this site or any products or services obtained or stored in or from this website, whether based on contract, tort, strict liability or otherwise. These limitations also apply to any third party claims against users.

Intellectual Property
Everything on this website is the valuable intellectual property of Asset Value Investors Limited, or their respective suppliers. We protect our intellectual property rights to the full extent of the law.

Copyright Policy
No permission is granted to copy, distribute, modify, post or frame any text, graphics, video, audio, software code, or user interface design or logos.

Hyperlinks
The existence of hyperlinks should not be construed as an endorsement, approval or verification by AVI of any content available on third party sites. By providing access to other websites, we are not recommending the purchase or sale of products or services provided by the website’s sponsoring organization. We do not review any of these third party sites. AVI reserves the right to require written consent for, or request the removal of, any links to our website.

AVI disclaims all responsibility for the content of third party sites

Security
For your protection, we require the use of encryption technologies for certain types of communications conducted through this website. While we provide those technologies and use other reasonable precautions to protect confidential information and provide suitable security, we do not guarantee or warrant that information transmitted through the Internet is secure, or that such transmissions will be free from delay, interruption, interception or error.

You acknowledge and agree that users of this website and users, owners, or managers of third party websites may not: (i) collect or store personal data about other users of this website or (ii) upload, e-mail or otherwise transmit any material that contains viruses or any other computer code, files or programs that might interrupt, limit or interfere with the functionality of any computer software, hardware, database or file, or communications equipment that is owned, leased or used by AVI.

Privacy Policy
We encourage you to read AVI’s Privacy Policy which can be obtained by clicking the Privacy Policy button found on the Homepage.

General Terms
Deliberate misuse of any element of this website including, without limitation, hacking, introduction of viruses or similar code, disruption or excessive use or any use in contravention of applicable law, is expressly prohibited and we reserve the right to terminate your access to the website, and at our discretion, pass information to the legal authorities.

We reserve the right at any time on giving notice to change or modify these terms and conditions or to impose new conditions in respect of this website or to change or discontinue any aspect or feature of this website. We shall be entitled to terminate your access to this website at any time on giving notice to you and in any event if you commit any breach of these terms and conditions. We shall have no liability to you for such termination. Notices may be served by any reasonable method including posting on this website.

You shall indemnify us from and against all actions, claims, proceedings, costs and damages (including any damages or compensation paid by us on the advice of its legal advisors to compromise or settle any claim) and all legal costs or expenses arising out of your use of thise website, any breach of any applicable law, statute, ordinace, regulation or third party rights and any breach by you of the software licenses and service agreements governing the software made available to you in connection with this website.

These terms and conditions shall be governed by and construed in accordance with the laws of England without regard to conflicts of law principles. Nothing in these Terms and Conditions will exclude or restrict any duty or liability we may have under applicable rules or regulations.

AVI Global Trust – General Risk Factors

AVI Global Trust plc is a public company listed and traded on the London Stock Exchange.

Past performance should not be seen as an indication of future performance. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested. The trust uses gearing techniques (leverage) which will exaggerate market movements both down and up which could mean sudden and large falls in market value. Please refer to the Key Features Document for further details effecting affecting your investment.

Applications to invest in AV Global Trust referred to on this Site, must only be made on the basis of the current Key Features Document, or other applicable terms and conditions. Past performance should not be seen as an indication of future performance. Market and exchange rate movements may cause the value of a fund to rise or fall and an investor may not get back the amount invested.

As a result of money laundering regulations, additional documentation for identification purposes may be required when you make your investment. Details are contained in the relevant application documents. If you are unsure about the meaning of any information provided please consult your financial adviser or other professional adviser.

By agreeing to these terms, you agree that we may contact you by post, fax, email, SMS messaging or by other forms of electronic media to inform you of our products and services that we believe you might be interested in.

Disclaimer

INVESTOR – Risk Warnings

It is very important that you read this warning and disclaimer before proceeding, as it explains certain legal and regulatory restrictions applicable to any investment services and products we provide.

The content of this website is issued by Asset Value Investors Ltd (“AVI”), 2 Cavendish Square, London W1G 0PU

AVI is authorised and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom.

This website is not directed at any person in any jurisdiction where it is illegal or unlawful to access and use such information. AVI disclaims all responsibility if you access any information in breach of any local law or regulation. All persons who access this website are required to inform themselves and to abide with all applicable local law, regulations and restrictions.

The information on this website is not directed at any person or entity in the United States, and this site is not intended for distribution or to be used by any person or entity in the United States unless those persons or entities are existing investors in funds managed by AVI and they have applicable US exemptions.

Nothing on this website constitutes investment, legal, tax or other advice nor should it be relied upon in making an investment decision.

The funds referred to in this website are alternative investment funds (“AIFs”). The promotion of such funds and the distribution of offering materials in relation to such funds is accordingly restricted by law.

Shares in the funds mentioned in this website are not dealt in or on a recognised or designated investment exchange, nor is there a market maker in such shares, and it may therefore be difficult for an investor to dispose of his shares.

The information on this website is neither an offer to sell nor a solicitation of any offer to buy shares in any fund managed by AVI.

An application for shares in any of the funds referred to on this site should only be made having fully read fully the relevant prospectus and most recent financial statement and semi-annual financial statements published thereafter.

The Information is provided for information purposes only and on the basis that you make your own investment decisions and do not rely upon it.

AVI is not soliciting any action based on it and it does not constitute a personal recommendation or investment advice.

Should you have any queries about the investment funds referred to on this website, you should contact your financial adviser.

Past performance is not an indication of future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amount invested.

The funds noted in this website may be subject to higher risk and volatility than other funds and may not be suitable for all investors. These funds are not regulated.

Exchange rates may cause the value of overseas investments and the income arising from them to rise or fall.

The levels and bases of and reliefs from taxation may change. Any tax reliefs referred to are those currently available and their value depends on the circumstances of the individual investor. Investors should consult their own tax adviser in order to understand any applicable tax consequences.

The information on this website, including any expression of opinion or forecast, has been obtained from, or is based on, sources believed by AVI to be reliable, but are not guaranteed as to their accuracy or completeness and should not be relied upon.

You should be aware that the Internet is not a completely reliable transmission medium. AVI does not accept any liability for any data transmission errors such as data loss or damage or alteration of any kind, including, but not limited to any direct, indirect or consequential damage, arising out of the use of the products or services referred to herein. This does not exclude or restrict any duty or liability that AVI has to its customers under the regulatory system in the United Kingdom.

To make a complaint about this website ,please send a written complaint for the attention of the Compliance Officer at the registered address: 2 Cavendish Square, London W1G 0PU.

You agree to indemnify, defend, and hold harmless AVI, its affiliates and licensors, and the officers, partners, employees, and agents of AVI and its affiliates and licensors, from and against any and all claims, liabilities, damages, losses, or expenses, including legal fees and costs, arising out of or in any way connected with your access to or use of this website and the Information.

The existence of hyperlinks should not be construed as an endorsement, approval or verification by AVI of any content available on third party websites. By providing access to other websites, we are not recommending the purchase or sale of products or services provided by the website’s sponsoring organization. We do not review any of these third party websites.

No permission is granted to copy, distribute, modify, post or frame any text, graphics, video, audio, software code, or user interface design or logos.

Nothing on this site should be considered as granting any licence or right under any trademark of AVI or any third party.

Deliberate misuse of any element of this Website including, without limitation, hacking, introduction of viruses or similar code, disruption or excessive use or any use in contravention of applicable law, is expressly prohibited and we reserve the right to terminate your access to the Website, and at our discretion, pass information to the legal authorities.

We reserve the right at any time on giving notice to change or modify these terms and conditions or to impose new conditions in respect of this website or to change or discontinue any aspect or feature of this website. We shall be entitled to terminate your access to this website at any time on giving notice to you and in any event if you commit any breach of these terms and conditions. We shall have no liability to you for such termination. Notices may be served by any reasonable method including posting on this website.

These terms and conditions shall be governed by and construed in accordance with the laws of England without regard to conflicts of law principles. Nothing in these Terms and Conditions will exclude or restrict any duty or liability we may have under applicable rules or regulations. You irrevocably waive any right to a jury trial in any dispute or proceeding arising from the use of this site.