Almost a year ago now, in March 2020, we were asked to stay at home. I am sure you remember during that period we experienced a shortage of essentials products. The main two products that come to mind were toilet paper and flour, the second followed the first. Flour became important because during those lockdown days many people began baking bread to pass the time.
Making bread is considered a simple and easy activity (not so much for the less experienced as myself) and there are only three basic ingredients involved: flour, water and salt. But as all bakers would agree, what makes a good loaf of bread is the key ingredient: TIME.
Investing follows a similar process. There are three key ingredients as well: stocks, bonds and cash, which are the main asset classes taking part in the construction of a standard asset allocation. These ingredients are combined into a mix tailored to each individual’s goals and objectives. The mixture then needs time.
What would happen if you fuss with the dough while rising? Perhaps it would not get to the desirable size and we would not end having a good loaf of bread after baked. Likewise, our initial plan could fail if we get impatient with an investment strategy and deviate from it.
While both cases referred to above are very different, the outcome of both is very similar in the sense that time remains a critical ingredient in achieving the desired results.
To read the full article and case studies, click on the Russell Investments link below.
Russell Investments – Bread-making & Investments
And remember the value of units can fall as well as rise, and you may not get back all of your original investment.
