Time in the market - Raiz Invest

When investing, it’s important to keep the big picture in mind.

However, we know it is difficult when it’s your own money, and seeing the big picture is not always easy.

If stocks go up, it is easy to feel elated. If stocks go down, it is just as easy to feel devastated and can test the resolve of even the most experienced investors. It’s only when we start investing in the market that we can learn how emotional investing is. Even professional investors have difficulty managing these emotions.

During a market downturn, when your emotions are running high, it can be tempting to sell your investment, however this carries the risk of missing the best days in market.

The graph below shows how missing just 10 of the best performing ASX 200 Accumulation Index market days has the potential to cut your returns in the long run. If you miss the best 30 days, it removes nearly all your return. It’s almost impossible to predict when the best days will be; being disciplined and investing for the long term is one way to avoid the risk of missing them.

Source: Fidelity. Past performance is not a reliable indicator of future performance.

One thing you learn in the long term is that crises are often not as bad as they are initially predicted to be – but also that good times are never as good as they are predicted to be.

If your only response to a falling market is ‘sell sell sell’ (and not remain disciplined), then perhaps you shouldn’t be in the market. Even in a falling market your investment goals should be to control your emotions and stick to your strategy.

A popular phrase is that ‘it’s about time in the market, not timing the market’. That is, the longer you are in the market, the more likely you are to see a healthier return.

The chart also illustrates the importance of financial literary and having a sound plan you can stick to, since lacking a plan can carry a bigger risk than the market itself.

The hands on market experience that Raiz brings, combined with the app’s automated tools and ability to invest small amounts regularly, are so powerful because they can provide a plan to assist in managing market induced emotions.

For more information on investment risks please read the Raiz product disclosure statement. To learn more about Raiz fees, click here.

“Successful investing takes time, discipline and patience.” – Warren Buffett

 


 

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Important Information

If you have read all or any part of our email, website, or communication then you need to know that this is factual information and general advice only. This means it does not consider any person’s particular financial objectives, financial situation, or financial needs. If you are an investor, you should consult a licensed adviser before acting on any information to fully understand the benefits and risk associated with the product. This is your call but that is what you should do.

You may be surprised to learn that RAIZ Invest Australia Limited (ABN 26 604 402 815) (Raiz), an authorised representative AFSL 434776 prepared this information.

We are not allowed, and have not prepared this information to offer financial product advice or a recommendation in relation to any investments or securities. If we did give you personal advice, which we did not, then the use of the Raiz App would be a lot more expensive than the current pricing – sorry but true. You therefore should not rely on this information to make investment decisions, because it was not about you for once, and unfortunately, we cannot advise you on who or what you can rely on – again sorry.

A Product Disclosure Statement (PDS) for Raiz Invest and/or Raiz Invest Super is available on the Raiz Invest website and App. A person must read and consider the PDS before deciding whether, or not, to acquire and/or continue to hold interests in the financial product. We know and ASIC research shows that you probably won’t, but we want you to, and we encourage you to read the PDS so you know exactly what the product does, its risks and costs. If you don’t read the PDS, it’s a bit like flying blind. Probably not a good idea.

The risks and fees for investing are fully set out in the PDS and include the risks that would ordinarily apply to investing. You should note, as illustrated by the global financial crisis of 2008, that sometimes  not even professionals in the financial services sector understand the ordinary risks of investing – because by their nature many risks are unknown – but you still need to give it a go and try to understand the risks set out in the PDS.

Any returns shown or implied are not forecasts and are not reliable guides or predictors of future performance. Those of you who cannot afford financial advice may be considering ignoring this statement, but please don’t, it is so true.

Under no circumstance is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

This information may be based on assumptions or market conditions which change without notice and have not been independently verified. Basically, this says nothing stays the same for long in financial markets (or even in life for that matter) and we are sorry. We try, but we can’t promise that the information is accurate, or stays accurate.

Any opinions or information expressed are subject to change without notice; that’s just the way we roll.

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