Investing when Markets are Down

It’s difficult to watch markets fall and values decrease, but investors with a long-term investment time horizon can handle the volatility

For some of our clients during a market downturn, it’s hard to remember why they agreed to take on risk.  Stock Markets draw the most attention on their best days and worst days, but there is one “certainty” to make investing worthwhile: Stay the course and stick with your investment strategy throughout the good and the bad.

Here are three reasons to keep investing, even in what seems to be the worst of times:

 

1. Euro cost averaging is effective in market downturns

If you put some of your salary into a pension scheme at work or make monthly contributions into a savings account, you’re already using a form of euro cost averaging. It’s an effective investment strategy that not only protects you from price volatility but keeps you disciplined. It works particularly well when you don’t have a big lump sum of money to invest.

By putting a fixed amount into the same investment every month, you’re buying into the market regardless of where prices are. This eliminates the tendency to try and “time the market” and invest emotionally or speculatively. Over time, you’re buying more units at a lower price, which translates to more returns when the market inevitably rises again.

 

2. The best days in the market often follow the worst

Should you invest when the market is down?  Yes, you should invest when the market is down—and when it’s up and when it’s sideways. … If you’re already planning to invest, buying while prices are down can prove to be a smart move.

If you found that something on your shopping list has gone on sale, you’d definitely buy it and enjoy the savings, right? Stocks and investments should be no different. If you’re already planning to invest, buying while prices are down can be a smart move. After all, “buy low, sell high” is a standard mantra for successful investors.

Investing is about reaching your financial goals, and that requires keeping your eyes on the prize in all sorts of market conditions.

 

3. Your long-term goals can handle it

The stock market serves a very specific purpose for the average investor; usually, to grow a pot of money to use at a specific point in the future.

If you’re saving for a big, important goal, for example, your retirement, your kids’ college fees, a new house etc.  and it’s more than five years from now, your investments will more than likely recover. That’s why buying and holding a portfolio of diversified investments is effective for most long-term investors.

If you have cash or savings available for investments now is the perfect environment to maximise on potential growth.  Here at Oaktree, we are working with clients to execute an investment ‘phasing’ strategy to safeguard their wealth accumulation and take advantage of these exceptional conditions to obtain growth and returns. 

 

If you would like to know more then please contact us and let us help guide you through the process.

 


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