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Buying More ETFs During the Crash

March 26, 2020


“You get recessions, you have stock market
declines. If you don’t understand that’s going to happen,
then you’re not ready, you won’t do well in the markets.”
~ Peter Lynch, American investor Note: The following information is not financial
advice. It’s just a look at how I have been investing
in the share market during the recent crisis. Before we start, I invest in Australian ETFs,
exchange-traded funds. Here are some examples of ETFs that track
the Australian market. I invest in Vanguard’s VAS which tracks
the S&P/ASX 300 index. This represents approximately 300 of Australia’s
largest ASX listed companies. I invest using SelfWealth, an online broker
that only costs $9.50 per trade. If you click on the invitation link in the
description below and sign up, both you and me will receive 5 free trades. Over the last year or so, the ASX300 has been
doing quite well, until recently of course when it all came crashing down. Many investors panicked and sold everything,
hence the crash. However, what did I do? Well let’s start from last year. I bought $5000 worth of stock here. I bought here. I bought here. I bought approximately here. I bought here, and I bought here. I kind of ran out of money about then so I
stopped investing and started saving. And then February 2020 came. The markets started nosediving. Luckily, I had saved up a fair bit over Summer
and decided to buy into the falling market. While others were panicking and selling, I
started buying. I bought here. I bought here. I bought here, and I bought here. Now I’m pretty much out of money. Well, not completely out of money. I still have $15,000 left in the bank, but
that’s for emergencies. I would never recommend that somebody invest
ALL of their money. We should all keep something in the bank for
a rainy day. I know what some of you might be saying, “Why
are you buying into a falling market, you fool!”. Well, there are a couple of reasons: 1. I’m not investing for tomorrow, or next
month, or next year. I’m investing for seven to ten years down
the line. Sure, the market might fall some more during
the current crisis, but I don’t see it as a crisis. I see it as an opportunity to buy. I think we can all agree that the market is
a lot cheaper now than it was one month ago. 2. Selling isn’t going to help me. If I sold like many other investors have been
doing, I’d just be locking in losses. By keeping all my money in the market, I’m
allowing myself to benefit more from compounding over time. I still own all of these shares that I bought. They didn’t disappear. Eventually this crisis will be behind us and
the markets will start to rise again. And they could rise quickly because all the
governments around the world are pumping massive amounts of stimulus into the world economy. It’s only a matter of time before everything
is back to normal. 3. Distributions / dividends. By keeping in the market, I will benefit from
dividend payments. VAS is due to pay a dividend at the end of
this month. If I sold all my stock, I wouldn’t receive
that dividend. 4. This was always my plan — dollar-cost averaging. That is, I buy regularly over time to mitigate
the effects of volatility. Sure, I might have a paper loss at the moment,
that is, if I sell now, I would lose money. But that was never my plan. My plan was to always buy, and never sell. The only time I will sell is if I’m well
ahead and I want to use the money for some reason (for example, to buy a house or whatever). I had no intention of trying to game the market
by guessing when to sell and buy and so on. My only goal was to invest regularly, keep
a bit of money in savings in case the market falls, and then sit back and watch the dividends
roll in. As long as I’ve always got some money in
the bank, I never NEED to sell. And I would recommend that to everybody listening. Never put yourself in a position where you
are forced to sell. That will only bring you pain. Anyway, that’s what I’ve done. I’ve continued to buy over the last year,
regardless of where the market was headed. Clearly, I’ve bought more frequently since
the market has been falling, but that’s only because I thought the market was cheap. Over time, markets steadily track upwards. If you’re in it for the long haul, then
it doesn’t matter what happens this month, or next month. Over many years, the stock market is a sure
bet. And if it isn’t. If for some reason the entire world economy
crashes and stock becomes worthless, then I can also assume that money has become worthless
and it will be of no consequence anyway. If we’re all struggling to find food and
shelter, then I don’t think I will really care that Facebook or Apple shares have plummeted
to zero. Anyway, that’s how I’ve been investing
during the crash. Thanks for watching.

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