Covid-19 led us to panic-buy at the supermarket and to panic-sell on the sharemarket. As uncertainty around this global pandemic continues, Australia’s economy will remain turbulent.
Watching and acting on daily sharemarket price movements can soon become your worst enemy in uncertain times. What we do know is that expert advice always tells us to stay the course when it comes to investing, unless your financial situation and life circumstances absolutely warrant selling up.
Jonathan Shead, head of investments, Australia, at State Street Global Advisors, says one of the biggest mistakes you can make as a long-term investor is to fall into the trap of trading individual stocks and exchange traded funds (ETFs) daily (that is, trying to time the market).
“ETFs (like all shares) do allow you to trade in the moment. ETFs provide liquidity and are priced right throughout the trading day. That can lead to the temptation for investors to lose sight of their long-term investment goal,” he says. “We would encourage investors to focus on the long-term goals when trading ETFs and not to chew up their returns in transaction costs with trying to time the market.”
He says too often investors fail to account for the total cost of owning an ETF. They’re labelled as low-cost investment products, but not low cost if you’re constantly trading them. There’s the cost of trading an ETF as a security, as well as the expense ratio of managing the fund.
By their nature ETFs are an investment tool designed for the long term. They’re transparent, easy to use and generally low cost and give you broad market exposure. Existing in Australia for more than 25 years, ETFs have weathered volatile times before, says Shead.
Bulls and bears
Denne historien er fra May 2020-utgaven av Money Magazine Australia.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra May 2020-utgaven av Money Magazine Australia.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
An outrageous, beautiful monopoly
Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
Powering the AI boom
Beyond the software and chipmakers, where will the energy come from?
Get into life
Tucked inside super are products that can protect you from life's inevitable uncertainties.
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
Money lessons the kids need to know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
What's love got to do with it?
A rollercoaster of emotions could be driving poor crypto behaviour.
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.
