With all the political and economic upheaval happening in the United States, many investors are questioning whether they should sell their shares and sit on cash until things stabilise. So, what should you do?

The decision to sell shares during a time of turmoil is a common concern, but as Tash and Ana discuss, trying to time the market can be a costly mistake. Instead of panicking, investors should focus on a long-term strategy and ignore the media noise.

In this episode, Tash and Ana address these concerns, break down historical market trends, and offer practical investment strategies to navigate uncertainty. They highlight the importance of diversification, dollar-cost averaging , and maintaining a steady investing strategy. Below is a deep dive into their insights.

Why trying to time the market doesn’t work

"Timing the market is nearly impossible," says Tash. "It's important to stay invested, and this typically leads to better returns."

This is one of the most fundamental principles of investing. While global uncertainty can make investors nervous, trying to sell and buy at the right moments often results in worse outcomes than simply staying invested.

Ana reinforces this, saying: "Even if the market is up right now, even if it's been like a couple of months, are you going to sell your shares to realise those gains? And if so, when are you going to invest again?"

The key takeaway here is that frequent trading often leads to missed opportunities.

Learn more about why timing the market never works here and here !

The long-term view matters more than short-term news

The news cycle thrives on dramatic headlines, and right now, the US political and economic landscape feels unpredictable.

"There's a lot going on in the US at the moment," Ana concludes.

Many investors are wondering if political changes will disrupt the economy. However, history shows that markets generally recover over time, despite periods of instability.

"I don't know about you, but I've had a lot of messages from people concerned about what's going on with the share market at the moment. Should we sell our shares? Should we keep our shares? Should we be worried that Donald Trump might destroy the economy? Will he make the economy better? Lots of questions," says Tash.

The key is to zoom out. "We aren't trying to gloss over everything that's happening in the world," Tash clarifies. "But for today, we're just going to focus on the fear around the stock market and what's happening with your investments."

Short-term vs long-term market data

Looking at short-term data, the S&P 500 has grown 6.4% in just a few months. "That's a large amount in a short period of time, right?" Ana points out. "If we're thinking about averages being around 7%, that's quite high."

Over the past five years, the S&P 500 has delivered an annual return of 14.5%. While headlines can cause panic, historical data suggests that staying invested is a sound approach.

"If you look at the past 30 years, US shares have actually returned 11.1%, Australian shares 9.1%, international shares 8.2%, and Australian property 7.8%," Tash says.

Why trying to predict the market is risky

The market has survived many crises, including the dot-com bubble, the Global Financial Crisis , Brexit, and COVID-19. Yet, it has continued to trend upward.

Tash shares her own experience: "I've had times when I've thought that the world is not great right now. That it couldn't recover. During COVID lockdowns, for example – p eople were still working from home, people didn't have jobs, the world was shut down. But it recovered very quickly."

The lesson? No one knows exactly when the market will rise or fall, and trying to predict it can lead to missing out on gains.

Strategies to reduce risk during uncertain times

Rather than panicking, investors may be better able to manage risk by:

• Diversifying : Holding a mix of assets, including shares, bonds , real estate , and cash, can help smooth out volatility and reduce exposure to any single sector.
• Dollar-cost averaging: Investing a fixed amount on a regular schedule can minimise the impact of market fluctuations. This strategy ensures that investors buy shares at both high and low prices over time, helping to balance out investment costs.
• Rebalancing portfolios : Instead of reacting emotionally to market swings, investors can take the opportunity to reassess their portfolio allocations. If they find they are overexposed to a specific sector or region, they may want to make adjustments to align with their long-term goals.

The power of staying invested

Ana emphasises that your losses aren't locked in until you actually sell your shares, and knowing that it goes up and down is really normal. Selling out of fear often leads to regret, as investors miss out on the market’s recovery.

"If you're planning on investing for 10, 20, or 30 years, it doesn’t really matter what's happening today or in the next month," Tash explains. "You can take times like this slow to reassess, but don’t react emotionally."

Ignore the media hype

The media thrives on fear-based headlines.

"Unfortunately, headlines like ‘Buy and Hold the S&P 500 for 30 Years’ are really boring," Tash says. "And that's why you won't see them. You'll often see doom and gloom and drama. Try to block them out a little bit."

Ana sums it up: "Ignore the noise and just keep on investing. Remember why you're investing in the first place. If you have a long-term goal, sticking to it and focusing on it is actually a great way to block out all that noise."

Key takeaways

If you're considering selling shares due to fear, here are some key things to consider:

• Diversify your portfolio to reduce risk exposure.
• Focus on long-term goals rather than reacting to short-term market movements .
• Stick to a consistent investment strategy , such as dollar-cost averaging.
• Regularly review and rebalance your portfolio to ensure alignment with your goals.
• Ignore sensational headlines , as they are designed to attract attention, not to guide sound financial decisions.

If this episode sparked something in you, give it a five-star rating, drop a review, or better yet, share it with a friend. And if you're just starting out, the first ten episodes will get the financial gears turning. Follow us at @getrichslowclub and catch our personal updates at @tashinvest or @anakresina.

Happy investing!