What the Past 29 Years Can Teach Us About Long-Term Investing

If you had known in advance all the crises the world would face over the past 29 years, you might never have invested in markets at all.

Yet history shows that investors who stayed the course were still rewarded. 

“The market is designed to transfer money from the active to the patient.” Warren Buffett.

Turn on the news on almost any given day and it’s easy to feel like the world is full of uncertainty. Wars, political tensions, inflation concerns, economic slowdowns, and market volatility dominate the headlines.

For investors, this can raise a simple but important question: Is now really a good time to invest? 

The truth is that uncertainty has always been part of the investment journey — and history shows that markets have continued to grow despite it. 

Imagine it’s 1997. Someone offers you a strange opportunity: before you invest in the share market, they will tell you every major global crisis that will occur over the next 29 years. 

They describe the Asian Financial Crisis, Russia’s debt default, the collapse of the technology bubble, the September 11 attacks, the Global Financial Crisis, and a global pandemic that shuts down much of the world. 

With that information alone, many people might decide investing would simply be too risky. Yet the reality of what actually happened next tells a very different story. 

Between 1997 and 2025, the US share market (represented by the S&P 500 Total Return Index) delivered average annual returns of roughly 9–10% per year, assuming dividends were reinvested. 

In simple terms: $1 invested in 1997 grew to more than $13 by 2025.

This growth occurred despite recessions, financial crises, geopolitical conflicts, and a global pandemic.

Markets don’t simply reflect the headlines of the day. Over time they reflect the progress of businesses and people around the world; innovation, productivity, and the solutions people create when challenges arise. 

The same long-term trend can be seen here in New Zealand. According to Stats NZ national accounts, New Zealand’s economy has grown significantly over the past few decades. 

• 1997: approximately $108 billion GDP 
• 2021: approximately $349 billion GDP 
• 2025: approximately $440 billion GDP 

This growth has occurred despite global financial crises, natural disasters, and the disruption caused by COVID-19.

One of the most misunderstood aspects of investing is uncertainty.

Many investors believe markets should be predictable. In reality, uncertainty is one of the reasons investors are rewarded over the long term. 

If the future were perfectly predictable, markets would immediately price in all known outcomes and there would be little reward for taking investment risk.

Instead, markets constantly process new information — economic data, business performance, technological change, and global events. This creates volatility. 

But volatility does not mean markets are broken. It means markets are functioning exactly as they should. 

For most investors, the biggest challenge isn’t the market itself — it’s how we respond to it. 

When markets fall, it is natural to feel uncomfortable. The instinct is often to move to cash, wait for certainty, and then reinvest later.

The difficulty is that markets rarely signal when the worst has passed. Recoveries often begin while the news still feels negative. 

Another common mistake investors make is focusing solely on recent investment returns.

It is easy to look at a fund, a market, or a particular investment that has performed well over the past year or two and assume that it must therefore be the best place to invest. 

But chasing returns without understanding why you are investing in the first place can often be futile. 

Successful long-term investing is not about constantly chasing the highest return. It is about building a portfolio aligned with your goals, time horizon, and tolerance for risk, and then allowing that strategy to work over time. 

During periods of market volatility, many investors naturally look for safer options such as term deposits. Term deposits provide a fixed interest rate for a defined period, offering stability and predictable income. 

Reserve Bank of New Zealand data shows that term deposit rates have varied significantly over the past few decades: 

• Late 1990s and early 2000s: 6–8% rates were common 
• 2020–2022: rates fell below 3% 
• More recently: many term deposits sit around 4–6% 

While term deposits provide stability and income, they have historically delivered lower long-term growth than diversified share market investments.

For this reason, relying solely on term deposits is generally not considered a long-term investment strategy. 

Instead, they are best viewed as one component of a broader investment strategy, helping provide stability while other investments are positioned for long-term growth. 

Another key principle of successful investing is diversification.

Rather than trying to pick a few winning companies, diversification spreads investments across many businesses, industries, and countries. 

Research by Professor Hendrik Bessembinder shows that only about 4% of listed companies have been responsible for creating the majority of stock market wealth over time.

This means investors who concentrate their portfolios in only a few stocks risk missing the companies that ultimately drive long-term market growth. 

Diversified funds allow investors to participate in thousands of companies globally, increasing the likelihood of capturing those long-term returns. 

If an investor had invested $10,000 in global equities in 1997 and achieved roughly 9–10% annual returns, the investment could have grown to around $135,000 by 2025.

This highlights the power of time, compounding, and staying invested. 

Uncertainty is normal. Markets have grown through wars, recessions, financial crises, and pandemics. Long-term investing rewards patience, and diversification reduces risk. 

Periods of uncertainty are a natural part of investing. Markets rise, fall, and adjust as new information becomes available. While the short-term path can be unpredictable, history shows that disciplined investors have often been rewarded for their patience. 

At Central Financial Planning, we focus on evidence-based investing and long-term planning — helping clients build strategies designed to navigate uncertainty while staying focused on what truly matters. 

Because ultimately, successful investing is not about predicting the future. It’s about preparing for it. 

Sponsored Content: This article has been submitted by a contributing local expert as part of The Central App’s sponsored advisor programme.