Investing in a volatile market
It’s a well-known fact that share markets can be volatile, so investing your hard-earned money can sometimes seem a little unnerving. But have you ever considered that volatility can be a good thing?
Volatility as an opportunity
The natural human reaction to a falling share market is fear, which can sometimes lead investors to sell at a loss. Instead, think of a volatile market as a potential growth opportunity. As the market falls, buying opportunities could arise, as some investments become more reasonably priced.
Mindset is key
Starting off with the right investor mindset can help you on your investment journey. Accepting that volatility is inherent to share markets is the first step. A good investor mindset focuses on the bigger, long-term picture and avoids getting bogged down by the short-term ebbs and flows of the share market. Stay focused on your investment goals and don’t act with haste.
Filter out the emotion
It can be easy to get caught up in the emotion of investing. If your goal is to build your wealth over time, it’s important to remove emotion from your decision-making process.
Think back to the days of the COVID pandemic – a time of immense uncertainly and huge drops in share markets across the globe. And now come back to present day, when some share markets around the world – including Australia – have been hitting record highs in 2024!
If you had investments during the pandemic and you held onto them, they’d likely be worth more now. This is just one example to illustrate how riding out the wave could potentially benefit you in the long run.
Time is your best friend
When it comes to investing, time can be your best friend. The longer your money is invested, the greater the opportunity for growth.
The reality of the share market is - some days it’s up, and other days it’s down. There’s always going to be something happening in the world that will drive share market movements. Knowing you’re in it for the long haul and breathing through the short-term volatility, can help put you on the path to wealth creation.
