Should you buy shares in a volatile market?

* Transcript created by AI – may contain errors or omissions from original podcast audio

Let’s be honest, the global markets have been chaotic lately, so you might be wondering, is now a great time to invest and snag a bargain? Or is it a time to sit tight and not make any purchase decisions? In today’s episode of the podcast, I’ll share my 2 cents about whether the timing for the share market is right.

 Just a quick note before we dive in. Everything I share on this podcast is general in nature and does not take your personal circumstances into account. I’m not a licensed financial advisor, and nothing you hear on this podcast should be taken as personalized, financial, business, taxation or investment advice.

Before you make any financial decisions, please seek guidance from your accountant or a qualified licensed financial advisor who understands your specific situation.

Now you might be at various different stages of your journey in terms of owning shares. Maybe you already have a share portfolio, or maybe you’ve just bought one or two different stocks, or maybe you haven’t actually intentionally purchased any shares. Or maybe you think you don’t earn any shares, but actually inside your superannuation account, chances are your super fund is already investing in the share market on your behalf. So basically, you are an investor, whether you know it or not.

So today we’re gonna talk about what is going on globally and whether now’s a great time to be diving on in or whether now’s a time to sit. So the first question to address is, what’s the market going to do from here?

The short answer is no one knows the market can swing right up and right down in 24 hours can be up one day down the next.

And we are particularly seeing this in this current volatile global environment. Who knows what is happening day to day? The only people who truly know what is likely to happen next in global markets are not actually allowed to trade on it.

It’s called insider trading, if you use information that is not publicly available to make decisions around purchasing or selling shares. Outside of that, there are some people who are better equipped at understanding what share markets generally do.

So yes, there are some professionals that are better at knowing what’s likely to go on based on analyzing historical trends, reading data, looking at what businesses, financial statements are telling them, and they’re able to make more educated guesses. But even these professionals get it wrong sometime.

So if you’re waiting for certainty before you make a decision to invest, you’ll be waiting a long time.

So let’s cut to the question you really wanna know. Should you be buying shares right now in this current volatile market? Before I go on and share anymore, I just wanna give you a reminder that you should seek advice that is tailored to your personal financial circumstances. What I’m sharing here is only my opinion and it’s general information only.

So my 2 cents, should you be buying shares right now? It depends. There’s a basic economic principle. You might have heard me talk about it before, which is risk versus return. And generally what this means is that the higher chance of a return, generally the riskier something is, the lower the risk means the less likely you are to get a short term huge financial upside.

So what does that actually mean? My thoughts are if you were in your twenties or thirties, you’ve got time on your side. You can ride the ups and downs of the market over time.

You are likely more risk tolerant if you are closer to retirement. You might not wanna be gambling all of your money on the share market right now because you might not wanna see your investments drop and then need to wait potentially years for recovery. So you’ll likely lean into more stable, less volatile options.

In saying that there’s no one size fits all solution here. It really comes down to your personal circumstances, your timeline, your goals, and your tolerance for risk, and being able to see your balance go, let’s just say a little bit spicy.

If you are feeling ready to invest. If you are someone who has a bit of an appetite for risk, and you are ready to go ahead and buy some shares right here, right now, what should you actually invest in?

As I said earlier, there are experts who are sharing their opinions. There are analysts, fund managers, economists, who are all sharing what they think is going to happen.

In saying that, remember they don’t have a crystal ball either.

In theory, if they’re working with the same publicly available information as everyone else. So listen, learn, get informed, but also don’t assume that anyone has absolute certainty.

So if you are brand new to investing and you don’t even know where to begin when it comes to buying shares, maybe it feels like walking into a casino where everyone else seems to know the rules and you have no idea where to actually start. So let’s talk about some of the basics.

Firstly, don’t put all of your eggs into one basket. Diversify.

Again, this is about risk minimization, which brings us to a product that you may or may not heard of, which is called an ETF.

So what is an ETF? ETF stands for Exchange Traded Fund.

And the easiest way to think about it is like this. Instead of buying shares in one company, you are buying a bundle of shares. So rather than going all in on say a bank or a mining company, you are spreading your investment across a whole group. Some ETFs track entire markets.

So for example, you can buy an ETF that is the top 200 companies in Australia.

Some track global markets, a global index, ETF, or there are sector-based ETFs. So that’s like industries, like tech or healthcare or even defense.

So with one purchase, you are instantly diversified. Think of an ETF, like ordering a tasting platter. Instead of committing to just one dish and hoping it’s good. There’s another product which also spreads across multiple different companies, which is called a managed fund. So what’s the difference between an ETF versus a managed fund? Let’s simplify it. ETFs are basically bought and sold on the stock exchange, like shares.

They have lower fees and they are usually just passive. So they’re just tracking a market index.

Whereas managed funds, what happens is that the money is pooled and it’s actively managed by a fund manager. Because you are paying for an expert who’s sitting there and they’re going, okay, we’re gonna buy some of that. We’re gonna take some of that.

They’re usually a higher fees with a managed fund because you’re paying for the expert advice.

But essentially what you are doing with a managed fund is you are trying to beat the market, not just match it. So neither is better. They’re just different. You need to again, work out which is gonna be best for you. So if you are wanting to get started buying shares, you might be thinking, you know what?

I’m keen, I might get started, or maybe I’m ready to go and invest more. How much do you actually need to go and buy some shares? So in Australia to buy shares or ETFs in general, you need about $500 minimum per trade.

However, there are some platforms such as Spaceship Voyager or Rice Invest. Where you can get started with smaller amounts, which is called micro investing, so you can get started trading without having to have $500.

So to wrap up today, should you be buying shares right now? I know this is frustrating when I say it, but it really does depend.

Here’s what you do need to remember. Markets go up and down and that’s normal. Volatility, it’s a part of the system, and your chances of timing the market perfectly are very unlikely. So remember, the golden rule, higher potential returns means higher potential risk. So in volatile times, yes, there’s more opportunity, but there’s also more uncertainty.

My thoughts play the long game. Don’t try and play the market because that’s where the real money is made. If you are wanting help with your finances and wealth creation strategy, make sure you check out the Intentional Money Membership. Inside you’ll learn how to manage your money. You’ll learn strategies for budgeting and how to get started on your wealth creation journey.

This membership involves three live calls a month and a beautiful community inside where everyone is cheering each other on and supporting. So if you are keen to start your money journey, make sure you check out the Intentional Money Membership via the link in the show notes for today’s episode. Thank you so much for tuning into this week’s episode, and I’ll chat to you again next week.

* Transcript created by AI – may contain errors or omissions from original podcast audio