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Financial Happenings Blog
Wednesday, February 28 2007

Yesterday was, apparently, not a good day to be an investor.  More than $30 billion was wiped off the value of the sharemarket - a fact trumpeted by many media outlets.  In fact, ninemsn was describing it as 'Crash Wednesday'. 

You are kidding, right?

Don't worry about the $30 billion 'wiped' off the value of the sharemarket yesterday, what about the $70 billion of value the sharemarket has created for investors since the start of this year alone?  The market actually fell by less than 3% - which is hardly a crash at all.  And it has started to recover those gains in trading this morning.

The key point - a point that should be repeated again and again - is that investing in growth assets like Australian shares, listed property and international shares means that your portfolio will be volatile.  It will go up and down - there will even be years when returns are negatives.  Over time, though, the returns from growth assets will be higher than non volatile investments.

The key is to accept the reality of volatility before you invest.  The last thing you want to do is have markets fall, and they will fall much more than 3% at times, and then decide what to do.  Set a course, accept that volatility happens, and get stronger long term investment returns that come with investing in growth assets.


Scott Francis

Posted by: Scott Francis AT 05:27 pm   |  Permalink   |  Email
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