How investor impatience can come with big costs attached

Taking your time before selling an asset is important however much you might not want to hear it

We’re often told that patience is a virtue, which let’s be honest can be fairly annoying – we understand, obviously, but it’s not always easy to put this doubtless good advice into practice.

This maxim is just as frequently applied to investing as it is to other areas of everyday life, and will probably prove no less of an annoyance to anyone sitting on significant losses in 2022.

However, there is fresh evidence that when it comes to stocks, however much it might reek of being scolded by a parent or a schoolteacher, this advice should be grudgingly accepted.

One of the UK’s largest investment companies, Alliance Trust (ATST), has modelled a £1.3 billion impatience tax on knee-jerk decisions by UK investors over the last 12 months.¹

^{1. A national estimate based on 93 investors that indicated they would sell their investments if their portfolio fell by 5% over the course of a week. Total representative sample of 2,000 respondents adjusted for the UK adult population from ONS data (www.ons. gov.uk/peoplepopulationandcommunity/populationandmigration/ populationestimates/datasets/populationestimatesforukengland andwalesscotlandandnorthernireland). Investment returns based on historic returns of FTSE100 (www.ig.com/uk/trading-strategies/ what-are-the-average-returns-of-the-ftse-100--200529) as at July 2022. Calculated using the difference between the FTSE100 return and the cash interest rate return applied to 25% of the average investment portfolio of the adjusted representative sample of investors.}