Timing the share market
Investing in shares can be a new concept for some people. The logic of buying shares when they are low and selling shares when they are high makes sense; however timing the market is exceedingly difficult.
History shows in the long term that buying good quality blue chip investments and holding them for the long term usually results in the most profitable outcomes.
Why hold shares long term?
- Costs – Transaction costs of buying and selling shares can eat into your return due to the brokerage costs and potential capital gains tax. A heavily traded portfolio can quite quickly have returns eroded by these costs
- Dividends – The dividends you receive from blue chip shares can reward the long term investor as dividends generally continue to be paid in most market conditions. These dividends can be re-invested and allow the investor to purchase additional shares to bolster their wealth creation through the compounding of re-investing.
- Being out of the market – Research shows that missing just a few of the share markets best days can dramatically impact on a portfolio’s return. As a result of being on the sidelines on these good days you’ll generally find that once you are comfortable buying back into the share market you are buying in at a higher price.
Investor’s need to remind themselves that share market investing is a long term strategy and that you should be comfortable holding that investment for at least 5 years.
One of Warren Buffet’s quotes explains this well:
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
Let Apt Wealth Partners, Patrick Rowan & Associate’s in house financial planners assist you with your share investments – make an appointment today.
Please contact David Maddock, Senior Financial Planner at Apt Wealth Partners on 5221 7557 to make an appointment to review your situation.
David Maddock is an authorised representative of Apt Wealth Partners Apt Wealth Partners Pty Ltd ABN 49 159 583 847 AFSL NO. 436121