New to investing

Question

I am new to investing in EFTs. Any advice on how to not panic when I see my investments go into the negative?

Answer

Investing in ETFs (Exchange Traded Funds) can be a great way to diversify your portfolio and gain exposure to a broad range of assets. However, seeing your investments dip into the negative can be unsettling, especially if you’re new to investing. Here are some tips to help you manage your emotions and maintain a long-term perspective:

Understand Market Volatility: It’s important to recognize that markets naturally fluctuate over time. Prices of securities, including ETFs, will go up and down due to various factors like economic changes, political events, or market sentiment. These fluctuations are a normal part of investing.

Focus on Long-Term Goals: Keep your investment goals in perspective. If you’re investing for the long term, short-term losses may not significantly impact your overall financial goals. Historically, markets have tended to increase in value over the long term, despite short-term volatility.

Diversify Your Portfolio: ETFs are inherently diversified, which helps spread risk. However, consider diversifying across different types of ETFs, such as those that track different sectors, regions, or asset classes. This can further reduce risk and smooth out returns.

Regularly Review but Avoid Over-Monitoring: It’s wise to review your investments regularly to ensure they align with your financial goals. However, constantly checking your portfolio can lead to unnecessary stress and may tempt you to make impulsive decisions based on short-term market movements.

Educate Yourself: The more you understand about how ETFs and the markets work, the more confident you may feel about your investment decisions. Consider resources that explain market fundamentals and investment strategies.

Consider Dollar-Cost Averaging: This investment strategy involves regularly investing a fixed amount of money into a particular investment, regardless of the share price. Over time, this can help reduce the impact of volatility on the overall purchase price of the ETFs.

Stay Calm and Patient: It’s crucial to stay calm and not panic when markets drop. Reacting emotionally and selling off assets during a downturn can lock in losses and potentially miss out on any market recovery.

Remember, investing is a journey, and it’s common to experience some bumps along the way. Many seasoned investors have seen their portfolios go into the negative at some point but have recovered and achieved significant growth by maintaining a disciplined approach.

At Pearler, we understand that watching your investments fluctuate can be challenging. We’re here to support you with tools and resources that help you track your progress and make informed decisions, keeping your long-term financial goals in focus.

You can find out more about this topic here: June Investing Q And A

Disclaimer

I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

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