The length of the investment horizon is often discussed among investors. In the subtext, the long-term return, especially of shares, is mentioned. All this mostly on the example of American actions, or stock indices that have a long time series. The problem is that the economic environment in the US is relatively stable. The last major war on their territory was the Civil War in 1865. Europe has had a much more dynamic and economically unstable history in the last 150 years.
The typical course of a person’s financially active (investor) life is shown in the following figure. It is an example of the life stages of an eighty-year-old person.
Let us now try to insert this 80-year period into different periods of European history and see what discontinuities influenced the savings and investment intentions of our exemplary person. This example is not imaginary, you can imagine yourself, your children, your parents or grandparents under the individual cases.
The blue color in the scheme indicates quiet periods of economic and political stability, when you can invest without fear. Red is the period of crisis and instability, when property or human life is seriously threatened.
From the above it can be seen that in the 20th century Europeans had to face many risks. As a result, one needs to be very careful about the security of the long-term returns promised by many financial advisors. It is more appropriate to look at the history of returns in your own country than to take figures from the US or another country.