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Why Steady Eddie wins the race

Daniel Lane

Daniel Lane - Fidelity Personal Investing

Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.


Consider Eddie, Betty and Gary - three investors at the end of a thirty-year investment journey, with very different approaches to putting money into their accounts. 

Steady Eddie began investing regularly in the FTSE All Share 30 years ago (1 February 1990), making an annual contribution of £1,000 during that decade and increasing this to £2,000 a year between 2000-2009, and £3,000 between 2010-2019. By 1 February 2020, Eddie’s original investment of £60,000 grew to £166,776.

Please remember that past performance is not a reliable indicator of future results.

Bad Timing Betty had rotten luck. She only invested in the FTSE All Share when the market hit a peak, just before a downturn. Like Eddie, Betty set aside £1,000 a year, increasing this by £1,000 each decade between 1990 and 2020. However, her poor timing resulted in her investing these savings at the top of each investment cycle - meaning her original investment was worth £114,767 - more than £50,000 less than Eddie’s.

And, dead-set on catching the market troughs, Good Timing Gary chose to invest in the FTSE All Share when the market was at its lowest. He saved the same amounts each decade as his counterparts - yet, even with his gift for good timing, couldn’t match Eddie’s returns. Instead, his £60,000 saving pot generated returns of £144,215 - £20,000 less than Eddie.


Original investment amount

Amount after 30 years

Bad Timing Betty



Steady Eddie



Good Timing Gary



In each scenario, our investors’ savings pots continue to earn interest at a cash rate before the point at which they invest in the market.

So why did Eddie come out on top?

Well, his approach of getting his money in early and regularly beats the market watchers thanks to one clear factor: time.

It’s true that Gary was doing his best to bring down the long-term average price he paid for his shares but while he was hovering over the ‘buy’ button Eddie’s invested money was racking up dividends from the beginning. In this instance, it’s less about calling out how difficult market timing is - nigh-on impossible, just ask Betty - and more about recognising the value of compounding dividends over the long term. 

Of course, it’s important to draw out here that this has worked over the course of a broadly rising market. If there is a sustained market downturn then having cash on hand is quite useful to buy assets you like at knockdown prices. But, as Gary shows, waiting around for this to happen can really hamper your long-term returns.

So, what could be a message on avoiding the allure of hoarding cash while you wait for the market to drop takes on an additional hue of understanding the value of dividend growth in the meantime. 

Be like Eddie

For most of us, regular saving into our investments is the most practical way of taking our own actions out of the equation altogether. Drip-feeding our money into the market cranks into action the snowball effect of generating returns on previous returns, which can significantly boost the value of investments.

And while it’s unlikely any of us will be a Gary or a Betty - catching the exact highs or lows of the market would be remarkable - it’s reasonable for us to aspire to be an Eddie. 

Save early, save often and see where you could end up.

Read more on the benefits of setting up a regular savings plan

Five year performance

(%) As at 31 Jan






FTSE All Share






Past performance is not a reliable indicator of future returns

Source: Fidelity International, January 2020, returns are based on total return in GBP of the FTSE All Share, and returns from the Morningstar UK Savings 2500.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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