You can save your future self from financial misery by making sure you take advantage of this volatile share market period.
At the moment the S&P/ASX 200 Index (ASX: XJO) is down around 22% from the pre-coronavirus heights. Ignoring that the share market has been even lower, I think today’s lower price is broadly attractive. (However, I wouldn’t call every share a buy just because it’s priced lower.)
The thing is, our 65-year-old selves don’t suddenly wake up with a $1 million share portfolio out of thin air. It takes a lifetime of good financial habits, saving your dollars and investing diligently, to build that kind of wealth.
No-one can know how generous (or not) the Australian pension will be in two or three decades from now in ‘real’ terms. I’d bet it won’t be as generous as today as the demographics change.
If you want to have a good portfolio when you retiree you need to starting building it today. Or at least as soon as you can.
Would you rather buy shares when they’re priced 20% lower or 20% higher? I think it’s obvious what the answer should be! Warren Buffett has a good analogy for this with buying burgers from a supermarket. He’s going to keep buying burgers, so rejoice when prices are a lot lower.
What shares will help your future self financially?
I don’t think you can go too wrong with low-cost, quality exchange-traded funds (ETFs) like BetaShares Australia 200 ETF (ASX: A200), iShares S&P Global 100 (ASX: IOO) and iShares S&P 500 ETF (ASX: IVV).
I also believe there are some great fund managers to chose from. Shares like Magellan High Conviction Trust (ASX: MHH), MFF Capital Investments Ltd (ASX: MFF) and PM Capital Global Opportunities Fund Ltd (ASX: PGF) could be solid picks at these prices. Managers can be worth the fees if they outperform or you buy at a good discount to the assets.
But the best opportunities of all could be quality individual shares with great growth prospects.
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But you will have to hurry because the cheap share prices on offer today might not last for long.
More reading
- ASX 200 ends the day higher, EML share price rises another 12%
- These are the latest ASX shares to be downgraded by top brokers
- $3,000 invested in these 3 ASX industries could make you a fortune in the future
- Down 10% in 2 months. Are Coles shares a buy today?
- Why this ASX 200 stock could surge higher tomorrow
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