Share Market Swing
26 Nov, 2023
A super quick blog post this week because I thought you might find it interesting. My audience finds it helpful when we share our numbers.
My last blog post, Share Market Shocker, shared that our investments had dropped $25,000 between August and October 2023. I said I’d give you an update in a year. Well, just to show how fast and volatile the share markets are, it's only been three weeks, but I have an update for you.
To quickly recap. When I tallied up our combined investments of KiwiSaver (Simplicity High Growth) and our two ETF funds (Smartshares US 500 and NZ 50) on the first of November, they were $419,000. They had dropped from a high of $444,000, which is why I thought it was worth writing about.
Three short weeks later, on the 21st of November, they had increased in value by $23,000 and had a current balance of $442,000.
A $23,000 increase in three short weeks.
We started 2023 with a combined investment total of $403,000, meaning as of the 21st of November, we have had an increase of $39,000. This increase includes ~$22,000 of our after-tax income that we have invested throughout the year.
And finally, the last noteworthy figure is that when I compare our Nov 2023 balance with Nov 2022, the value of our investments has risen by $53,000.
I said in my last post to ‘give it time, and it will come right’ because I know that if you invest in ETF or Index Funds that buy the whole market, the share market goes up. If you are investing in individual stocks, all bets are off, I’m afraid.
Well, three weeks later, it’s on its way back up.
In October the combined balance of our investments was $419,000, and in three short weeks, it increased by $23,000 to $442,000.
What might the value of our investments do next week? I’ve no clue.
The point of this post is to share how comfortable Jonny and I feel with these fluctuations. $25,000 was a significant decrease. Now, $23,000 is a significant increase. Neither elicits a response except to say, “Well, that’s interesting”.
The higher the value of our investments grows, the more pronounced these swings in our investment balance will be. I’ve got many friends who have far higher wealth than us, and they sleep equally well at night because we each understand that it is all just part of the process. If you are new to investing, you must expect the same type of volatility. It is normal.
The price of houses have the same swings, but we just don’t get to see them. I sometimes wonder how those who invest in housing would cope if they could track their asset's exact value and saw similar price fluctuations on their bricks and mortar assets. But they never will because they only really ever know the price of a house if they buy it, sell it, or it burns to the ground, and your insurer tells you its value.
The moral of the story?
Continue to invest every month without paying attention to what the share markets are doing. If the share market drops, you can buy shares on sale. The share market rises, and you buy at full price. You win some, you lose some. But with this dollar cost averaging, it all evens out over time.
Finally, remember why we invest in our KiwiSaver or other ETF investments.
For those who are miles away from retirement: It’s to create a good chunk of money from which we can harvest small regular amounts to top up our government superannuation each fortnight after age 65. Or, for those wanting to make work optional long before 65, it is so we can apply the 4% Rule to our investments. For many, retirement is a long way off, so you will always hear commentators say, keep investing, and don’t pay it any attention.
For those who are already retired: The chances are you still have a long way to go before you meet your maker, so you still need to stay invested. But, as insurance against a drop in value, you will hear the popular wisdom of keeping a few years of cash in the bank to top up that superannuation payment while leaving the rest invested and growing over time. When the share markets recover, which they will do, then you replenish your cash stores.
So there you have it; we are currently $23,000 better off than the last time I blogged.
Have a great week.
