Taking a long term view to your investments
Taking a long term view of your investments means not panicking if the markets are done a bit because if you hang in there, you are able to take advantage of the swings and roundabouts in the markets. If you were investing directly into the sharemarket and have invested all your money in one stock then you have placed all your eggs in the one basket, and the odds are that you may lose the lot if the company which you have trusted with your savings goes bust.
The beauty of kiwisaver is that all the investments of everyone who is part of of New Zealand’s retirement scheme is combined and invested in a wide range of companies. This minimizes the risk of losses should there be a market crash but there is nothing one can do about it therefore it is best not to be concerned about something that is out of your hands.
When you are a young 20 or 30 something investor, you have more time to recover from a market crash than someone in their 50s or 60s. Some financial advisors would advise those approaching retirement to take a more conservative approach to investing because taking a financial hit late in life could affect one’s retirement plans.
The markets are driven by fear and greed. When the markets are going down many people sell for fear of losing their money. What these people fail to realize is that the markets can go up as well and very often the sellers are missing out on the gains which would have been available if they just hung in there. If they are so worried about losing their money in the markets then it is not a place that they should be investing there money in.
The astute investor can take advantage of the lull in the market for when the market is down, it is time to buy and let time be your friend.
Having said all of this, you have to have some kind of goal for your savings. Are you saving for a house deposit, retirement, overseas trip, to finance a business? Establish the “Why” and you will end up with some kind of goal for your savings.
This post is the opinion of the writer and is not intended as financial advice. If you are unsure of where to invest your savings, seek independent financial advice.
www.robertastewart.com
