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October to January is best time to buy stocks

October through to January is the best period to invest in the stockmarket, according to research by Hargreaves Lansdown.

HL has taken the total return of the FTSE All Share index in every month of each year from the start of 1970 – when Lipper began monitoring the index – to July 30, 2003.

Each of the monthly returns has been added together over the whole investment period and then divided by the number of times that month has occurred. For instance, there are 34 Januarys between January 1970 to July 30, 2003.

The results show January to be the most lucrative time to invest, giving an average return of 488 per cent. December is second with 476 per cent while November is third with 463 per cent. Fourth is October with 461 per cent.

The worst month to invest is May, which has given an average return of 419 per cent while June is shown to return 429 per cent and March offers a figure of 434 per cent.

HL says the results show the benefit of choosing specific times to invest, particularly considering that the fourth quarter has often been subject to the most severe financial meltdowns, such as the 1987 crash and the Asian crisis of 1997.

These downturns often offer investors a great opportunity to enter the markets, it says.

Investment manager Ben Yearsley says: “October through to January is clearly the best time to invest. The summer months are usually the quietest. It shows that the point of maximum pessimism – often in the fourth quarter – is the best time to invest.”

Simpsons of Brighton IFA partner Andrew Merricks says: “I would have to agree. The run-up to Christmas and the New Year is usually a good time to invest, in the same way that investing straight after the Isa season is not.”

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