As humans it’s normal to feel anxious, worried or even fearful during times like these when markets are highly volatile or losing value. What causes the problem is acting on those emotions and doing something irrational (and detrimental) to your longer-term financial health. To help illustrate this point, Vanguard have created a useful chart to show what happened to 3 investors who found themselves at the bottom of one of the worst bear markets in history: The Global Financial Crisis.
From 2008 to 2009, even balanced portfolios lost almost 30% of value. It was, to say the least, a stressful time to have money in the market.
Each of the investors chose a different course of action:
So how did the investors end up?
What this shows us is that the investors who panicked and sold equities at the bottom of the market would have taken years to break even… or they would have realised their losses and locked them in, to wind up with far less money than they would have had they done nothing and simply stayed the course.
To find out more about how any of these measures may be of assistance in your individual circumstances, please contact Gordon Thoms or David Conte at Calibre Private Wealth Advisers on ph. (03) 9824 2777 or email us here.
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