Ten reasons to stay optimistic about your money

Sometimes it can be hard to be optimistic. Given we love data and evidence here at First Wealth there are several reasons to take a cheerier view of the world and, from our perspective, your money.

“Always look on the bright side of life,” goes the immortal Monty Python song. It’s something to hold onto when things appear bleak.

And, from one perspective the world does appear bleak: conflict between nations, conflict within nations … people seem to have more reasons to quarrel than to cooperate.

But that’s one perspective. The other – which we think Monty Python’s, Eric Idle, might have agreed with – is that there are plenty of reasons to be optimistic. This is something that should especially apply to your finances.

The world is getting better, not worse

A few years back, a Swedish academic called Hans Rosling published a remarkable book called ‘Factfulness’. With all the poignancy only a posthumous work could muster, Rosling argued the long-term sweep of history is heading towards positive territory.

And he had ten reasons why:

1. Global living conditions have improved dramatically – for example, child mortality and illiteracy rates have all decreased significantly over the past century.
2. In 1966, about 50% of the world lived in extreme poverty. Today, it’s below 10%.
3. Life expectancy is above 72 years. In 1960 it was 50 years. Even in poorer countries, people are living longer, healthier lives.
4. Most people assume the world is divided into “rich” and “poor,” but most people now live in middle-income countries.
5. In 1950, 15 million children died before the age of five. Now’s a just a third of that, while the population has more than tripled
6. Birth rates are down – and they’re not spiralling out of control.
7. More people, especially girls, are receiving education than ever before.
8. While natural disasters and wars still occur, they cause fewer deaths today than in previous decades, thanks to better technology, healthcare, and international cooperation.
9. The world is more connected, with access to technology that gives people the tools to improve their lives and stay informed.
10. The “Negativity Instinct” makes us focus on bad news – but we should recognise this bias and see the progress humanity has made.

Data can tell you things your eyes might not immediately notice.

Markets go up more than they go down

Enough cultural references. I think you get the point: it’s easy to focus on the micro and short term; much harder to see the macro and longer term.

When we think about your wealth, the same thinking applies. Have a look at this chart of the American stock market over the last three months. There are all sorts of things you could say about it, but a good caption might just be a gulp!

And here’s the same market since the mid 1990s. What looks horrific on one scale looks inconsequential on another. And the only time scale that really matters is your life … not some arbitrary, random few months.

Here’s another way to look at the same sort of data. Markets go up more than they go down. That’s self-evident – if they didn’t, we wouldn’t bother investing. But to what extent do they do so? Well, the probability of positive returns (based on historical data since 1926) is as follows:

Market downturns are temporary. Growth is consistent over time.

Optimistic people can make better decisions

We hope these ideas and numbers might dispel any mental grey clouds. After all, experience tells us that focusing on long-term growth, rather than short-term fear, can help you build a more sustainable financial future.

Above all, being optimistic helps you stay the course, make better long-term decisions and ultimately achieve more consistent financial success.​

It’s our job as financial planners to manage your money and instil confidence, perspective and a long-term vision. Every storm is followed by a period of renewal. The best strategy is to stay the course, focus on progress, and embrace the opportunities ahead.

Whether you’re cheerful or fearful, we can help. Do please get in touch at hello@firstwealth.co.uk or on 020 7467 2700.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.