Why I’m still Investing During Coronavirus.
When you turn on the news, it seems every day there is another story on the share market. Somedays the headline is ‘historic’ losses! Other days the market is bouncing back because of this or that.
It’s no secret that the share market is down from the historic highs we saw early this year. The Vanguard Australian Shares (VAS) index that tracks the biggest 300 companies in Australia reached $90.82 on 20th of February 2020…Then in just over a month, it dropped to $58.35. This trend has been seen across the wider sharemarket. This sort of loss is enough to make even the most experienced investors a little shakey.
I’ll be the first to admit it, I was a little shaken by the losses… But then I reflected on the rules I’ve been following and got back on with life. And I kept investing, here’s why.
The share market has trended up over time.
Check out this article I wrote a couple of weeks ago. I had a look at the major downfalls in the sharemarket since 1900. What I found was that each time the world experienced a crisis, the share market dived… but each time the market recovered and reached new highs.
I’m in it for the long haul.
Share investors had it good for the last 10 years or so. But up’s and down’s are just all part of the “fun” when investing. I don’t like the ‘down’ times but I have come to accept them.
The Australian Share Market has returned an average of 13.21% over time. But I’m going to look at this conservatively and expect a 9% return. If I invested $10,000 in 1990 and achieved a 9% return each year – my $10,000 would have turned into $132,677. And I would be laughing!
Only what I can afford.
When times were going great and the market was at historic high’s, people were disappointed in the returns of keeping their money in a savings account. I saw a lot of talk from people thinking about putting their saving and future house deposit into the market. I hope they didn’t.
What helps me get through the rough times is only investing money I don’t need. I’m not trying to mix my investing and savings account. The money I have put into the market is money that I won’t need for the next 5 or so years. If I’m saving for a holiday, house deposit or anything else, this money stays in my bank account, earning sweet ‘F-all’ in interest… but it’s safe.
I’m bargain shopping.
Because I know the market has trended up over time, I’m investing for the long haul and I’m only investing what I can afford, I have changed my view on the current downturn.
In my “new” view of the market, Coronavirus has created a fantastic buying opportunity. I’m not looking at the balance of my portfolio – I’m looking at the number of unit’s I can buy of each share…and at the moment, everything is on sale!
My investing dollar goes a lot further then it did at the start of the year.
What’s funny is when you look at share investing this way (unless you’re in retirement) you embrace the downturns.
If you’re still accumulating your portfolio, it doesn’t make sense that you want the share market to go higher. Each time there’s are gains, it means that it’s going to cost you more and make it harder to reach your goal.
As I have kept investing during Coronavirus, the market has continued to fall. Despite all the headlines that there are further losses to come, I have kept investing.
I can’t predict the future and I don’t believe that anyone else can either. My plan moving forward is to tune out to headlines created to get clicks through fear. I’m going to keep on investing.
I guess this is why they say investing is about psychology, not finance. I’m far from perfect…but I’m sleeping a whole lot better now.