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Rising inflation, time to panic sell!

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Rising inflation, time to panic sell!

This week, I lost 15% of my investment gains in a week due to the news on rising inflation. HELP ME! SLEEPLESS NIGHTS!

Heyday

Last March, during the corona dip, the stock exchange fell by at least 25%. After that, investors have been celebrating heydays since last summer. Almost all sectors are on the rise and the economy seems to be gaining momentum. This week that all changed. Due to the expected inflation of 2.1% in America, the stock markets have dipped considerably this week. This is because higher inflation often results in higher interest rates. Fewer people and companies take out loans because you pay more interest on them. That slows down economic growth.

So much has happened in the past months that this dip that the newspapers are now full of is actually not that important at all. If there is news that has an impact on investments, you will always see it enlarged in the figures. When the news is good, the figures shoot into the green and when the news is bad, the figures fall sharply.

I just lost 15%

Since March 2019 I have been investing in index funds with degiro. In the more than two years that I have invested there, I have been able to achieve good results. Of the profit I have made in the past two years, at least 15% has evaporated in a few days. I’m not worried about it. Since the beginning of this year I in fact gained on 60% profit.

I do not worry about this because I know that the balance will be restored and that I am not at a loss. AlsoI invest for the long term and well diversified. So I don’t have sleepless nights and sweaty bouts with this kind of dip. If a company, sector or country goes down, the other investments in the index will absorb the dip. In the long term of about 20 years, such a dip is faded easily.

don't panic sell over rising inflation!
Just fly high over the dip

Don’t lose a night of sleep

Do you want to achieve a good return but no sleepless nights? Then I can wholeheartedly recommend that you invest a fixed amount in an index fund every month. By investing every month you sometimes buy your shares expensive, other times cheaply. Ultimately, you buy at the average price. This principle is called dollar cost averaging. Do this every month, preferably automatically. After a few years you have a considerable return and after 20 years there is a good chance that you have built up a lot of capital. Make sure you only do this with money that you really don’t need in the first years, otherwise you will still have sleepless nights. Do not panic sell!

If you invest 100 euros every month and on average you have a return of about 8% (which is historically average) then that could be worth about 65,000 euros after 20 years. Your deposit 24,000 of your earned euros, and for the remaining 41,000 you don’t have to do anything other then set and forget. Just 100 euros every month. So get rich while sleeping, instead of sleepless nights. Ha!

Do you want to know what my portfolio looks like? Then read the post about my investment strategy.

Are you nervous about a dip in the market? How do you deal with this? Let me know!

Until next time!

Elske

I am not a Financial advisor nor am I your financial advisor. I am not a trained financial professional. This blog is for entertainment purposes only.

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