Investing: Don’t Just Do Something, Sit There!

Investment Market performance in the last 14 years has been very strong, but on any day in the last 14 years, you could find persuasive content that would lead you to sell your investments and move into alternative assets, and this would have been a terrible financial decision.

I recently had a client reach out because they had read that China is selling down their ownership of US Bonds, and this could destroy USD as well as investment markets. My answer is that:

• China has been reducing holdings in US Bonds since 2014 (40% reduction in this time)
• The more they reduce, the less influence they have
• China holds only 2.5% of US Bonds
• His diversified portfolio is invested globally, not into the US only
• The fund he is mainly invested into (Dimensional) has a USD/NZD hedge so he is not exposed to currency fluctuations.
• Publishers know that the more dramatic their opinions, the more clicks they will get.
• The best thing to do is to stay diversified as he is, and not to over react to the news, because there is news every day that can persuade us to change our investments.

We all know that there are problems in the world. However, making long-term financial planning decisions based on current events is a sure way to fail.

Is it good to be informed? Sure. However, getting caught up in the cycle of negativity is not helpful to anyone.

A good test is trying to remember what you were concerned about two years ago. For most people, it's difficult to remember. We move on to new concerns, leaving others in the past.

The market does the same, constantly climbing a wall of worry (stopping every now and then for a break).

This visual is one of our favourites. Listing a string of previous crises, we do so not to make light of previous tragedies. However, by reflecting on the events we've overcome, we can build the courage to endure future events with discipline.