Why It Pays to Stay Invested
Investing is a long-term game. A marathon as opposed to a sprint, where an investor is more likely to achieve their investment goals if they stay invested and avoid making short-term decisions which often spring from emotional or rash decision-making.
This year, we have seen stock markets rally across globally with the FTSE 100, Germany’s Dax and the S&P 500 reaching record highs. Locally, the benchmark FBM KLCI is also charging towards the 1,800 points-level, climbing to a fresh two-year high.
Can this market rally be sustained? Well no one knows for sure. But the only constant in the investment-universe is change, and investors should always be prepared to brace for future volatility, in the event markets come to an unruly end.
Smooth Seas Never Made a Skilled Sailor
Volatility is to be expected in markets. Like waves in an ocean – one would get nowhere otherwise without the ebb and flow in markets that provide buying or selling opportunities.
Can small ripples suddenly turn violent and become sizeable tsunamis? Sure they can.
But what matters more is having a well-diversified portfolio that has the potential to weather against varying degrees of volatility and cyclical change. Feeling queasy about one’s investments when markets swing between highs or lows, is characteristically normal.
It’s how one decides to react, or if they should at all that makes a skilled investor. Determining the source of the volatility is key, especially in filtering out short-term noise from long-term fundamentals & economic realities.
Short-Term Pain Vs. Long-Term Gain
Staying put when everyone is beginning to jump ship can be unsettling for any investor. But sometimes sticking it out to endure short-term pain could mean the difference between recouping back all your losses & reaping higher returns, or missing the boat entirely just as markets begin to rebound