2022 has been a challenging investing environment. For those new to investing, this may have been the first time you have experienced market volatility and possibly a negative return on an investing portfolio.
While this can make some feel uneasy, it is normal throughout market cycles for stocks, bonds and ETFs to experience periods of both ups and downs. Over time, markets have historically shown their ability to be upward trending, even if sometimes it takes longer than others.
So how can you choose to invest during uncertain market periods in a way that plans for the long term, avoids feelings of unease and feels more in control?
Have a long-term investing mindset
By thinking long term, sell offs in the short term become a blip in a long-term investing strategy, rather than a defining moment where you potentially sell your holdings at the bottom of a market cycle.
We understand how short-term down movements in the market can feel undesirable, but it can also be an opportunity to invest at the lower part of the cycle where a lower entry price can be achieved. Investing small amounts regularly is known as Dollar Cost Averaging. By investing small amounts regularly, no matter what is happening in the market, some investments are made at the low part of the market cycle, which could help your portfolio performance over a longer time frame and manage the risks associated with investing.
Don’t invest more than you can afford
In times of market corrections and market stress, those who simply have no other way of accessing money for short term goals could be forced to sell down their investments.
To be able to do this, one needs to have savings for short term goals in cash, or expenses sitting ready and available in an everyday bank account, so that regular investing is still possible without the need to withdraw from a market linked investment account in market downturns.
Having a cash buffer for your everyday expenses, or an emergency fund, will also hopefully remove feelings of stress and the need to watch markets as closely.
42% of Raiz users have never made a withdrawal
Many of you in the Raiz community are taking the long-term investing philosophy head on. They are investing small amounts regularly, sticking to their goals, and building their portfolio balance for the long term.
All investments carry risk.
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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.
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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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