Simple tips for investors in bear markets
According to experts, the bull run is almost over. While there are mixed reviews on whether we are heading into bear market territory, what we know for sure is that the markets are very volatile right now.
For most investors, their portfolio is most likely in the red. My investment portfolio with Autowealth is down by close to 4%. It’s not as bad as the rest of many investors because my portfolio consists of a diversified portfolio of ETFs and I continue to average down every month.
I’m no investment expert so I’m not going to tell you what are the stocks to sell and what are the stocks to buy.
What I’m going to tell you (or think of this as a reminder if you have heard them before) in this article are common sense investment advice that everyone should follow.
Every week, I’ll be sharing practical tips and invaluable knowledge to guide you on your path to financial independence.
Don’t panic and sell everything
“Running back to town and tell everyone the sky is falling when an acorn drops and hit you on the head while sleeping under a tree, was such a silly thing to do.” I’m sure that’s what Chicken Little would say now that he is 14 years older (the movie was out in 2005).
All you need to do is to look up and realise that the sky isn’t falling.
Stay calm and clear your head before you make any investment decision.
Believe in your investment strategy
Everyone has their own unique profile and circumstances. That’s why we create our own investment strategy that works for us.
In my case, I plan to retire by 50 so I have another 14 years of investment runway and a strong savings rate to my advantage. I can afford to have an aggressive asset allocation and wait for the market to recover. On the flip side, my lack of knowledge in investing techniques also means that I have to keep my investments simple and easy to understand.
I believe that what I’m doing is right so I am going to stay on course.
If you are feeling stressed about the market downturn, I advise you to look back at your investment strategy and decide if it’s still relevant. If it is, stay on course. If it isn’t, time to spend some time to update it.
And if you don’t have an investment strategy, this is the perfect time to create one.
Don’t try to time the market
Unless you have the time to do tons of research and attempt to predict future market price movements and have a huge cash stashed away to afford to make mistakes, I don’t recommend trying to time the market.
As the saying goes, time in the market is better than timing the market.
Markets are unpredictable so it would be wiser to spread your risk by diversifying your investments in a longer term strategy.
So what are you going to do?
If you’re the nervous Nellie who checks the prices of your investment portfolio every day to chart the prices, you might want to consider not looking at them for a while.
When the going gets tough, remember the long game.
You have a long term investment strategy and I trust that you will do well if you stick to it.
