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&#39Equities can still produce millionaires&#39

Standard Life Investments warns that stockmarket volatility is here to stay

but says equities can still catapult people into becoming millionaires.

The company&#39s research shows that people investing £25,000 a year can

expect to become millionaires in 14-27 years. It says the quickest

accumulations happen when investments are started during a bear market such

as the times following the two world wars or in the middle of the 1970s.

Standard says the present economic conditions following three consecutive

years of stockmarket declines mean it is a good time to start regular

equity investments.

In its Global Horizons, a new annual compendium of research into long-term

investment issues, Standard dismisses sector rotation as an explanation for

the recent events in the stockmarket.

Head of risk Dr Julian Coutts says increasing specialisation and the advent

of “just-in-time” inventory management are more plausible reasons for the

current volatility, which is unlikely to be reversed.

Chief investment officer Keith Skeoch says he accepts that deflation is a

threat but believes that the likelihood of global deflation is very low.

Standard says demographic trends are more predictable indicators than

economic factors. It believes the bull market in Government and corporate

bonds corresponds with an ageing population and this trend will continue in

the US but could be curtailed in the UK.

Global Horizons also examines the world&#39s two most populous economies –

India and China – and concludes that while China&#39s economy is expanding

rapidly on the back of low-cost manufacturing, India&#39s lesser debt problems

and more favourable demographics make it a better bet.

Skeoch says: “2002 has been a difficult year for all investors. The success

of our approach has been founded on strong research generating clear

insights.”

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