Investment Update November 2018 - A Holiday Perspective
Those who have been following share markets will know that returns during 2018 have been more variable (both up and down) than in the few years prior, which were unusually smooth.
With plenty happening during the year, the temptation to keep a very close eye on investment returns is high. At first glance it might therefore seem a little worrying that only just over half of the days this year have delivered a positive return for shares. But this is exactly in line with history. Over the past 70 years, ‘only’ 53% of days have seen a market rise. Put another way, when you look at the share market on any given day, whether it’s gone up or down is pretty much a coin toss.
Put that together with our emotional tendency as humans to feel twice as much pain from a loss as we do pleasure from a gain. It is then clear that someone who checks their investment balance every day is not going to have a very pleasant time!
It gets better though. Despite ‘only’ rising on 53% of days, someone who just checked in annually would have seen a positive return 75% of the time. This rises to 98% of 10-year periods and all 15-year periods, reaffirming that most short-term returns are ‘noise’ for someone with a long timeframe.
In investing, like in many things in life, the best way to have a good experience is to have the right perspective.
In investing, like in many things in life, the best way to have a good experience is to have the right perspective. Thinking about it this way, long-term saving, and investing has some similarities to going on holiday. When you have packed up and headed out on the road to your destination, if you run into roadworks on the way, you are unlikely to respond by turning the car around. And when you get there, with glass of wine in hand, you probably will not call the cattery or dog kennel each day to see how the pets are getting on either.
So, feel free to sit back this summer – if your investment approach (or retirement plan) has been designed with your financial adviser to be in line with your timeframe, goals and ability to ride out shorter term ups and downs, then your portfolio will thank you for it.
Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs. Any opinions contained in it are held as at the report date and are subject to change without notice. This document is solely for the use of the party to whom it is provided.
Market & Portfolio Update - April 2022
Global share markets continued their choppy start to 2022 during April.For New Zealand based investors, a fall in the NZ dollar played an important role in helping offset the volatility global share markets experienced. The NZ dollar fell against most major currencies supporting the returns of unhedged overseas assets (assets that are free to move with exchange rates). As a result, ‘unhedged’ overseas investments fell by only 1.8% for NZ based investors.
The KiwiSaver Gender Divide – Why are women saving less and what can be done to combat this?
Recent data shows that, on average, women have 20% less in their KiwiSavers than men. The gap being at its largest between men and women in their 40s and 50s. There are a few factors that come into play causing this divide and although it will take years to achieve equality, there are ways in which we can be proactive to help close the gap. As of August 2021, the gender pay gap is at 9.1% in New Zealand, a decrease of about 0.4% from 2020’s stats.