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Embracing the Cyclical Nature of Investing

Did you know investing follows cyclical (repeating) patterns? Throughout history, markets have always bounced back from major world shocks like the Great Depression, world wars, and the Global Financial Crisis of 2008. Market dips are normal, but they eventually recover and continue to grow.

This is particularly relevant in the context of KiwiSaver investments, and how understanding this pattern can help you navigate the inevitable ups and downs with ease. Investment markets are dynamic and influenced by various factors, both internal and external. Periodic fluctuations are all part of the investment landscape. Over the decades, most investors have witnessed market downturns, but they’ve always been followed by periods of recovery and growth.

Understanding the cyclical nature of markets allows you to adopt a long-term perspective on investments, whether it be your KiwiSaver or other investments, which is crucial for maximising returns and achieving your financial goals. As you watch your investments flourish, it’s only natural to feel anxious and concerned when market downturns occur. However, these should be viewed as temporary phases within the growth trajectory of your investment journey.

Remember:

• Embrace market volatility. Every investor faces this challenge, and the key is to focus on the bigger picture and long-term gains.

• Practice patience. Patience and persistence pay off, so resist the temptation to make impulsive decisions based on short-term market changes and fluctuations.

• Diversification is key. Diversifying in your investments (as most KiwiSaver funds do for us) is a great way to spread your money over a variety of sectors and reduce risk.

Investing is all about long-term gains, even if the path is a bit bumpy from time to time. Are you after some support or advice with your KiwiSaver? Get in touch, we’d be happy to help you out.

 

Mike Bennett AFA