John had just started his investment journey money with a robo-advisor at the end of 2019 before the covid-19 crisis occurred after seeing that the markets had grown well through in 2019. What was unexpected was that no one saw the health crisis coming along the way. What happened within the next year was an extreme roller coaster ride.

In the depths of the health crisis in March 2020, fear gripped him. The whole world was in uncertainty and turmoil and many of his friends had shared that the crisis would turn out to be even worse. He was shocked that the markets had dropped quite significantly (almost 30%) so he sold all the investments out.

After realizing the loss of 30%, the markets recovered very promptly, again unexpectedly. He knew that he needed to invest the money as the interest rates in the banks was miserable. He thought he would try again to try to invest, with another attempt. So in the last quarter of 2021, he decided to go back to invest into the markets just before the US elections. His investments actually did pretty well and grew about 10% during that period when he invested. Fear gripped him again at the end of 2020 as his investments had grown well and he read in the papers that markets are at ATH (all time high). And having experienced that dramatic loss early in the year, he decided to sell out and wait for the markets to correct again.

What was again unknown to him is that the markets continued to rally almost another 20% from the beginning of the year.

Instead, if a person had stayed invested throughout the entire time frame from the end of 2019 to Dec 2021, the investments would have grown by almost 40+% throughout the same period.

What are the lessons learnt for Deep Education?

It is very hard to time the market

Even if a person may get it right once or twice, he has to get it right multiple times with many entries and exits. In the short term, it is almost like gambling because it is very hard to know what the markets will turn out to be in the short term. However, we do know from evidence that markets had grown on a upward trendline since 1920s and will continue that path in the long term as long as there is innovation and constant desire for human consumption for a better life. However, there is going to be expected volatility in the short term.

Appreciating and embracing volatility

If a person expects that investments are going to be straight line upwards, he will be in for a rude shock. Whilst it is true that investments markets go up over the long term, it is going to be peppered with unexpected twists of ups and downs. So just like sitting a roller coaster, it is best to stay seated throughout the entire ride and not try to jump off along the way which is the most dangerous. Wait till the end point when it comes to a stop and you will be in safe hands.

Structure your investments according to your goals and time horizon

However, it is noted that some goals may be realized in the shorter time frame and if that is the case, we help you to design your asset allocation according to your personalized objectives. Volatility can be reduced significantly by reducing the equity exposure and inserting a higher allocation to bonds to dampen the swings. The shorter the time frame available, the lower the risk appetite should be taken.

Journey with an experienced advisor

Despite having known all the above steps, when the markets go crazy, which it will from time to time, people will continue to make emotional decisions as we are swayed by human behaviour. What you want is not the highest returns but you want to be able to achieve your goals safely with a strategy based on evidence and with someone who is experienced enough to hold your hands through. And in some unique cases, a person may not even need to invest or he has to find a way to spend more money, give more money to his charity or family members while he is still around.

Let us have an initial conversation to see if there is a right fit to get you to build CORE portfolios of 7 figures and above without the need to speculate and to use an evidence-based approach.