Indexing firm Vanguard has called on investors to ignore the short-term market fluctuations created by events like the UK's Brexit and to concentrate on 30-year returns.
The MSCI World ex-Australia index fell 4.44 per cent (from peak to trough) during the recent volatility surrounding the UK vote to leave the European Union, according to Vanguard.
The firm's 2016 Index Chart, which tracks the performance of major asset classes over the past 30 years, shows that the recent stock market falls prompted by Brexit are a 'blip' when compared to more serious crashes.
"By comparison, the Global Financial Crisis saw the S&P/ASX300 fall by 50.26 per cent, and the Tech Wreck in 2000-2003 saw the US S&P500 fall 50.37 per cent, as examples of how other significant market events have played out," said Vanguard.
Vanguard Australia head of market strategy Robin Bowerman said the headlines about Brexit were hard for investors to ignore, but focusing on the long term is the best bet.
"We have been in a fragile market environment since the second half of 2015, and the recent volatility surrounding Brexit generated a lot of market noise," Mr Bowerman said.
"That can be hugely distracting for investors, who are generally better served by sticking to long-term, goal-oriented asset allocations rather than making decisions that are reactive to market movements.
"The recent referendum vote in the UK may prove to have medium to longer term implications for the European economy and global markets, and no doubt more evidence of those effects will emerge as negotiations around the issue unfold.
"Although we can expect some further ups and downs on the road ahead, the relatively rapid stabilisation of many markets after the initial Brexit news highlights the value of resisting the urge to be spontaneous when market shocks occur," he said.
The Vanguard Index Chart shows the performance of $10,000 invested into various asset classes in 1986 (with returns invested).
Over that time, Australian shares grew to $154,405, returning 9.6 per cent on average each year. By comparison, $10,000 invested in Australian bonds grew to $128,829, while cash grew to $75,023.