Investing for long-term capital growth

Investing for long-term capital growth - November 2021

November 2021: Corolab Investment Guide. Investing for long-term capital growth

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Why do you invest for the long term? - November 2021

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Coronation Insights

Coronation Insights

People invest for the long term for different reasons. It may be for discretionary purposes, such as a child’s education in five to 10 years’ time, or for retirement, which may be multiple decades (30 to 40 years) from now.

Whatever long-term objective you are aiming to fund, as a long-term saver you are ultimately interested in the real (or after-inflation) rate of return on your money committed.

YOUR ‘REWARD’ FOR DELAYING GRATIFICATION

Earning a positive real return is what matters most to long-term savers. For example, as is clear from the table below, the ability to compound returns at a positive real rate of 5% per year increases your purchasing power by 1.6 times over 10 years (or 7% per year, the real return that has been achieved by Coronation Balanced Plus since its inception) and by 7 times over 40 years. Being able to add an additional 2% a year by way of alpha doubles your purchasing power after a decade, and improves it by 15 times over 40 years – a material impact.