Keep calm and stay invested.

The only certainty about our current market conditions is uncertainty and volatility. As soon as we seem to be out of the woods and the market recovers somewhat from one upset, the next one appears. In recent years we’ve had Donald Trump as USA President and his trade wars, Brexit, Nenegate and State Capture to only name a few.

All these events have, understandably, made investors nervous and unsure about what investment strategy to follow. Being emotional about your investment is normal but sadly this often leads to making the wrong choices at the wrong time.

Today I want to highlight one of the most well-known principles in the investment world; “It is not about timing the market but time in the market”. This might come as a cliche but sometimes we just need to hear it again and again.

The following table brilliantly illustrates the impact on your investment returns if you only missed a few of the best days on the JSE.

If you were invested in the JSE for the full period (not missing one day), you would have had a 15.1% return, whereas if you only missed 25 or 50 of the best days over the 20 year period your investment return would have decreased significantly.

There is simply no way an investor can logically identify when these good days will happen, and therefore the risk of trying to time the market is extremely high. No matter how volatile the market is, sometimes the best thing to do is nothing and stay invested. Especially if you have a well-structured investment portfolio.

Heinrich Coomans | CA(SA) | CFP ?  is a director at Affluence Group and spesialises in Investments, Personal and Business Insurance. For any questions please contact him at  [email protected] or 084 586 9509