‘The Stock Market is a device for transferring money from the impatient to the patient. ‘
‘A Bear Market is a 20% decline in asset values.’
Investors should try to always separate their emotions from the investment decision-making process. What seems like a massive global catastrophe one day may be remembered as nothing more than a blip on the radar screen a few years down the road. Remember that fear is an emotion that can cloud rational judgement of a situation. Keep calm and carry on!
Slow and steady wins the investing race
The moral of the hare and the tortoise fable is you can be more successful by being slow and steady rather than quick and hasty. When it comes to investing, over the long term ( usually more than ten years ) markets have risen in value.
Remember your long-term goals
Some people may panic.
You may wonder, why not get out while things are bad and just get back in when they are better
Trying to time the markets is extremely hard.
Investors who give way to panic and sell during periods of market stress often feel the pain of loss twice. First when they lock in their losses by panic selling, and secondly when they miss out on the recovery.
If you are a long term investor, as we would try to promote and advise upon, you will need to get back into the market eventually. When is the best time ?
Accumulate with Euro Cost Averaging
The most important thing to keep in mind during an economic slowdown is that it’s normal for the stock market to have negative years—it’s part of the business cycle. If you are a long-term investor (meaning a time horizon of 10+ years).
By purchasing shares/funds regardless of price, you end up buying shares at a low price when the market is down. Over the long run, your cost will “average down,” leaving you with a better overall entry price for your investment.