Large amounts of funds have been injected into markets and used to bail out struggling companies. Interest rates have been cut and most analysts are expecting them to fall further in the near future. These actions should eventually reduce home loan stress and encourage business investment. Security has been given where possible through government guarantees to help assure consumers that their bank deposits are safe. A few key points:- Keep in perspective
Many investment options experienced negative returns over 2008. Consider what returns those investments have achieved over the long term, and remember that you may have many years left before you need to access your funds.
- Don't miss the bounce
No-one can predict when exactly the share market downturn will end, and often it is when you least expect it. Remaining invested ensures you don't miss out on any bounce-back that occurs.
- Safety in larger and less geared corporations
We have seen a number of financial corporations around the world fail to recover from the pressures places on them often created by heavy gearing (eg high proportion of bank debt used to finance acquisition of assets).
Attached is a summary of the actual index returns for each of the main asset classes since 1999. If you study those you will realise that if you remain invested through the good times and bad in Australian shares or in each asset class, you have still grown your net wealth. Actual Indices Returns | Australian Shares | Global Shares | Australian Property Securities | Australian Fixed Interest | Cash | Constructed Returns Balanced | 1999 | 14.3% | 19.9% | -5.2% | -0.3% | 5.0% | 8.7% | 2000 | 14.5% | 11.7% | 13.5% | 9.4% | 6.2% | 11.7% | 2001 | 5.5% | -15.1% | 18.1% | 8.4% | 5.4% | 2.5% | 2002 | -4.7% | -21.5% | 12.4% | 5.5% | 4.7% | -3.6% | 2003 | 9.0% | -7.5% | 7.0% | 3.5% | 4.9% | 3.2% | 2004 | 28.7% | 9.5% | 29.7% | 8.9% | 5.6% | 15.9% | 2005 | 22.5% | 16.6% | 12.3% | 4.8% | 5.7% | 13.4% | 2006 | 23.8% | 12.8% | 31.5% | 4.4% | 6.0% | 14.1% | 2007 | 23.8% | 0.6% | 5.3% | 3.3% | 6.7% | 9.2% | 2008 | -40.5% | -23.0% | -52.1% | 13.3% | 7.8% | -19.2% | | | | | | | |
Source: Colonial Fist State
22nd-April-2009 |