EVEN when the going gets tough in the equity markets, we can generate reasonably good returns by remaining invested amid market volatility – and to not drastically switch out at the first sign or whiff of trouble!
As fear is an inherent human emotion, it is quite natural to assume that investors fear to hold on to their investments especially during what seems to be market-moving events. However, the intensity and fervour of such events usually die down after a couple of weeks.
Moreover, riding through short-term market swings isn’t such an unacceptable proposition that some make it out to be.
In order to achieve superior returns, successful investors have stayed invested throughout the market cycles, rode out of short-term volatilities and even looked to accumulate more when market crashes presented them with bargains.
Here are four famous investing gurus:
Conclusion
You have to accept that you can never be the first or the fastest to react to the whims of the markets and the shifts in sentiment.
Markets are notoriously hard to predict over the shorter term. A better way is to think ahead of the crowd; two or three years down the road. Pick a good stock or a better-managed unit trust fund and hang on through the short term market trends.
Let time do the heavy lifting for you. Superior returns can be generated by riding through market volatility and by staying invested.
All of us are investing for a reason, be it for our eventual retirement or children’s education. The time until the life goal materialises spans many years.
To put things in perspective, if you are a 40-year old adult and saving up for your children’s education in university which is 10 years’ away, day-to-day fluctuations in the equity market should not bother you at all.
Invest for the long term by looking at the bigger picture. If you keep thinking of the trees, you will end missing the forest.
Remember, it is time in the market, not timing the market. – Aug 15, 2021
Danny Wong Teck Meng, CFP is the CEO of Areca Capital Sdn Bhd and a Certified Member of Financial Planning Association of Malaysia (FPAM).
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Photo credit: Getty Images
