Have you checked your portfolio today?

Rather than worrying about day-to-day price movements, focus here instead. 

If you checked on the status of your investment portfolio today, don’t worry. You’re definitely not alone.

In fact, you may have looked at how your various investment holdings are faring multiple times by now, just to see how much you’ve gained or lost since yesterday.

It’s investing psychology in motion. Most of us do it, just because we can.

After all, it’s so easy these days using mobile apps or online platforms. But doing this really contradicts one of the core principles of successful investing.

Rather than being fixated on the day-to-day movements of financial markets, especially during times of heightened price volatility, what we should be doing is ignoring the constant noise around what markets are doing on a daily basis.

In the overall scheme of things, what happens today is largely irrelevant. Just like you’re unlikely to worry about changes to your superannuation balance every single day, there’s not a lot of point in worrying about daily changes to your investment balance either.

The power of compounding returns

Markets volatility is typically linked to short-term events, particularly economic conditions but sometimes geopolitical events.

Market downturns are also nothing new. They do happen, for a range of reasons.

Think back to 2020 when financial markets fell more than 30% over just a couple of weeks as investor panic set in over the spread of COVID-19.

It was a disturbing period for most investors, but within a short time markets had already started to rebound very strongly.

It’s an important lesson for all investors. Which is why Vanguard produces a chart every year showing the total investment returns from a range of different asset classes over a 30-year period.

Among other key events, the last 30 years includes both the 2007-08 Global Financial Crisis and the 2020 COVID-19 market crash.

The Vanguard Index Chart proves year after year that even a low initial investment balance will grow substantially over time when combined with compounding investment returns.

Sticking to a long-term investment plan, with diversification across a range of asset classes, allows you to grow your wealth even in the face of market crises and short-term volatility.

There’s nothing inherently wrong with checking your investments daily, weekly or monthly.

However, regardless of daily events, what’s most important is to stay focused on your investment goals and your overarching strategy to achieve them.

Investors who stay the course over time, riding through the regular ups and downs of the markets, have a much better chance of achieving investment success than those who take short-term positions and try to time when to buy and sell.

Speak to us for more on long-term investing.

Source: Vanguard June 2024
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™ GENERAL ADVICE WARNING Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966). The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”). We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions. Important Legal Notice – Offer not to persons outside Australia The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws. © 2024 Vanguard Investments Australia Ltd. All rights reserved.

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