What’s Wrong with My Index Fund?
Hi Barefoot,
I followed all the advice in your book – cleared everything, saved up, paid off my mortgage and invested a lump in a low-cost index fund. And since August 2021 it has gone backwards and I’ve lost $4,000. They are down 2.96%. Is it just my fund or are they all doing badly?
Gutted of Oakleigh
Hello Gutted of Oakleigh,
Buying an index fund isn’t as simple as grabbing a box of Rice Bubbles.
Let’s think about what’s happened in the last six months since you made your investment:
We’ve had runaway inflation in the US, and in most parts of the world.
We’ve had the threat of rising interest rates in a world awash with debt.
We’ve had the Chinese property market imploding.
We’re still dealing with the pandemic (China is still locking down millions of people).
We’ve had commodity prices surging, and food prices at record highs.
We’ve had ‘once-in-a-century’ floods in NSW and Queensland.
Oh, and then we had the war in Ukraine.
All things considered, I think you’re doing pretty well! I’d suggest you learn to take a longer-term view.
It’s not all snap, crackle and pop, my friend!
Scott.