Long Term Investing…

Share markets, like life, have their ups and downs. When it comes to the Australian share market, the only thing that is predictable is its unpredictability. So how do you navigate the world of investing without taking a big hit? The simple answer is – take a long-term view.

Over the last 100 years, the Australian share market has posted positive returns in 80 per cent of calendar years as illustrated in the graph. This highlights the importance of having a long term focus rather than reacting to short term volatility.

Whenever there is short-term market uncertainty, investors often get caught up in the momentum and noise, which can lead to emotional decision-making. By taking a long term approach to investing, you give your investments time to recover from the downswings that are a natural part of any investment cycle, and reap the rewards of the inevitable upswings. History also shows us that the Australian share market has previously gone on to achieve new highs following each low.

That’s why a well formulated investment strategy is necessary to keep you on track. Investment decisions should be based on principles and fundamentals as opposed snippets of information, emotions or even mass hysteria. But more than anything, keep that long term view!

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