It’s been on the News for a few weeks already and everyone is wishing it was not. It’s been named Covid 19, is causing chaos and very few are spared. What is currently happening is disrupting lives and economies around the world. No one saw it coming, not so fast in any case. Financial Markets around the Globe have reacted forcefully and will continue to respond with increased volatility, as they do when faced with uncertainty.
I won’t attempt to minimize this human and economical crisis with its resulting effects but I want to remind you that this has all happened to us a few times before, although in different ways. Markets have always absorbed the shock, recovered and rebounded higher. New opportunities will again present themselves.
To help you keep everything in perspective, and to remind you of why it is so crucial to stay invested, here are:
The “5 Timeless Principles for Investing Success”:
1- Think Diversification: It’s rare for any investment to repeat as a top‑performer from one year to the next. Diversifying across various economies, businesses, countries and popular investment classes can help spread risk, remain more consistent and reduce the potential for under-performing assets to impact your portfolio.
2- Be rational – not emotional: In good times, investors are excited, they want to invest more and often “buy high”. When markets turn negative, investors become fearful and decide to cut their losses and “sell low”. Stay disciplined and committed to your long-term investment plan to avoid riding the emotional roller-coaster.
3- Missed days means missed opportunities: The difference between investment success and disappointment can boil down to a few days of being in or out of the markets. By staying fully invested and not missing the best 20 investment days over the last 20 years, an investor would have more than doubled their investment.
4- Measure performance over time, not overnight: Accept the fact that markets will rise and fall but over time markets have always moved higher.Taking a long-term perspective can help you stay the course when markets move from crisis to opportunity and back again.
5- Turn market volatility to your advantage: if you are not doing this already, start a monthly contribution plan. By investing a fixed dollar amount at regular intervals, dollar-cost averaging can help you buy more units of an investment at lower prices, and fewer at higher prices. This helps take the worry out of making a single lump sum investment at the wrong time.
We understand how these events are impacting our lives but they will come to pass, it is usually over within a few months. We encourage you to stay the course no matter how tempting it may be to want to take action now. Once this is behind us, it will be seen as a great buying opportunity.
Then, and only then, Action will be warranted. We hope this helps.