When advising on investing in unit trusts, one of the most common 'objections' we receive is, “But the stock market is turning bad or the stock market is very high now”.
Most people just focus on the market movement, especially the indices such as KLCI, Dow Jones, Nasdaq, Hang Seng etc.
Little do we realize that all these indices are actually made up of a selected basket of listed companies to represent the Market.
For example, KLCI is made up of only 30 companies, mostly large cap companies that fulfills the eligibility requirements.
However, there are approximately 1000 companies listed on Bursa Malaysia (KLSE).
So NOT all listed companies share prices are falling just because KLCI falls. Remember there are some good undervalued opportunities around.
Market fluctuations create opportunities, so investors who look beyond the short-term bumps and choose to ride the wave of volatility (meaning continue to invest regularly or value cost average) will reap the benefits when the market rebounds. Remember to focus on our long term financial goals (retirement or kids' education funds) and not looking at unit trust as a tool for 'making money."
Photo by Mitch Nielsen on Unsplash