You see… I believe some of you who have been investing your money, witnessed a depreciation of value in your portfolio, especially investment in funds.
Your $100,000 investment is now $40,000 in value.
Your $50,000 investment is now $20,000 in value.
…and your $30,000 invesment is now $10,000 in value.
When emotions sets in, to most, they will panic and cry, telling themselves, “oh my god! I’m losing money…Have to sell, to CUT MY LOSSES”….
If you read my prior posts, I have already explain that, you do not lose money, if you do not sell your units. It is only known as “paper losses”. If you sell, you realised your loss.
The market will recover. Now is a good time to do top up or if you dont have spare cash, just hold on to your investments. The market will recover, for you to recover back your “paper loss” capital and then later make profit in the bull run.
Here are 2 main reasons,on why I say the market will recover.
1) Structure Of Index
You see, when you invest in index, in funds, you invest, in a group of “best” companies.
An index only retains the VERY BEST COMPANIES.
(USA) Dow Jones Index indicates performance of 30 largest capped American companies.
(USA) S&P’s 500 measures 500 best earnings performance companies.
(Singapore) STI Index measures top 29 representative companies.
(UK) FTSE 100 measures 100 most highly capitalised companies listed on London Stock Exchange.
(Japan) Nikkei 225 measures most watched Asian index.
(Hong Kong) Hang Seng measures 45 of the largest companies on HK stock exchange.
(China) SSE Composite tracks value of top 50 Chinese companies on the Shanghai Stock Exchange.
If any of the best companies, in the index, dont do well, they get KICKED OUT, replaced by a better performing one.
Example for Dow Jones. In October 2008, AIG not performing, thus was removed and replaced by Food and Beverage Giant, Kraft.
2) Inflation
I always tell my client, “Today, you eat MacDonald, costs $7.
20 years later, you eat MacDonald, will cost you DOUBLE, $14.”
That is what we called INFLATION.
Rising cost of living results in prices of goods and services going up. This then result in revenue of companies to increase. Which is then reflected in the stock price.
The stock price contributes to the value of index. So….if stock price increase, the value of the index will also increase. When you buy your index at $1, and you later sell it at $2, you make money! 🙂
So….Ladies and gentlemen…If you have money in funds, hold it or do a top up now, to dollar cost average your investments. Make money! 🙂
p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…
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