KiwiSaver lacks advice

Do markets recover?

Always. We just don’t know when. But they do recover.

But to get the recovery in investment markets you must be invested today. You will never time your return to growth investments from where you have been hiding in conservative investments.

Look at how the eight largest sharemarket downturns in the US have recovered in the past.

The biggest sharemarket downturn since World War 2 was the Global Financial Crisis. The sharemarket fell 60%, recovering nearly +54% in the following year and nearly +100% within three. Once you are in these things it is best to ride them to their conclusion.

Treat your investments like you treat your family home

We need to treat our volatile investments like we treat our family homes. Should I be worried that our family home has just gone down in value? If we wanted to sell it today, we would probably have to take a 20% discount on what it was worth two months ago.

Noone though is panicking in our home about its value today. Not anytime, because it is part of the longterm Plan.

We aim to stay here for more than the next two or three years — perhaps even another 30.

Recent market movements

As of time of writing (March 30 in the US market) the S&P 500 accumulation index is down 22% from its high on February 19 2020. It was down a full 34% on March 23 a week ago, but has bounced back

17% in the past 5 trading days.

Is this the beginning of the recovery? I doubt it, but it could be. I have no idea. What we do know is that markets will generally recover in advance of the actual problem. It is a big forecasting machine.

In summary, I recall the proverb of trying to change horses in midstream. Very dangerous. Changing your investment Plan midcrisis is equally as dangerous . . . to your longterm wealth.

My advice is to stick to your Plan and wait for the recovery. Don’t look at your investment balances.Your adviser (or KiwiSaver manager) is looking at your investments daily, so you don’t have to. You are better spending your energy on other the things. Wash your hands. Stay in your bubble. Phone loved ones. Walk the dog. If you are investing according to your Plan, chances are you are still on track. Happy investing.