Equities - the 'new safe option' for portfolios?

'NOT taking risks at all is the biggest risk." This is our motto during these times of financial repression. Some investors think perhaps equities are even more "secure" than bonds - it depends on the perspective. In this article, we shall explore the behavioural pattern of equities in the very long run and present the case for a long-term growth story behind equity investments.

When reading the headlines about new highs in share prices, don't you find yourself wishing you had invested more, or even invested at all? The reasons investors hesitated or did not act can probably be explained by the theory of behavioural finance. As a rule, investors are averse to losses and basically do not act in a purely rational manner. Increasing losses weigh more heavily than additional earnings, and many were burned in the crises witnessed so far in this young century as stock market losses reached nearly 50 per cent. Therefore, many investors have closed their eyes and maybe do not see the long-term growth story behind equity investments, or that equities can offer more growth potential over an investment period of 30 years than top-rated government bonds, and that going into stocks is still worthwhile for investors with a long-term horizon that seek reliable returns.

A growth story