Why now is a great time to invest in ASX shares (even if you’re fearful of an uncertain world)

It’s pretty easy to see the benefits of investing in ASX shares, or sharemarkets around the world for that matter, when markets are rising. The S&P/ASX 200 Index (ASX: XJO) gained a very healthy 13% or so over 2021. And that followed even healthier gains across the second half of 2020.

As such, it was very easy to see the kinds of gains one might be a party to if one invested across those periods. Not to mention the potential cash that one would miss out on if they didn’t.

But 2022 thus far has given investors a different tale. We are now in mid-March. Yet still the ASX 200 remains in the red year to date. Since the start of 2022, the ASX’s flagship index has lost 5.82% of its value. Suddenly, it’s a lot harder to convince a new investor of the benefits of investing in the share market.

And that difficulty has been compounded by the wild gyrations we have seen more recently in light of the tragic war in Europe. The world certainly seems an uncertain place right now. And when it costs almost double what it did even a few weeks ago to fill up your car, it can be hard to even contemplate ratcheting up investments into shares. 

Global uncertainty doesn’t always mean we shouldn’t invest in ASX shares

But even if the world has become, or even remains, a more uncertain place, it doesn’t mean that investing has automatically become a bad idea. As our Chief Investment Officer here at the Fool, Scott Phillips, has reminded us many times, the share market has seen more than its fair share of wars and other awful geopolitical events over decades and decades. And it has never not gone on to eventually enjoy subsequent new record highs. 

An article in the Australian Financial Review (AFR) today argues that while the world might indeed stay at a more uncertain level than perhaps we’d like, that might still open up new opportunities for investors. For example, the article quotes intelligence advisor Andrew Shearer, who argued Australia might need to become more self-reliant in the face of global supply chain instability:

This will include sharply increasing defence spending. But also building stronger manufacturing capability at home and shortening supply chains by pulling back from the globalised just-in-time world we knew before the pandemic.

Commodities are also an area that is highlighted. The AFR quotes Matthew Klein on this matter. He said that “a synchronised surge in demand for physical goods will continue to put upward pressure on industrial commodity prices, especially since many of those commodities used to come from Russia”.

We’ve arguably already seen some of the effects of this in the ASX’s resources shares in recent weeks. Shares like BHP Group Ltd (ASX: BHP), Paladin Energy Ltd (ASX: PDN,) and Woodside Petroleum Limited (ASX: WPL) are lifting.

So while the world may be moving towards a period of higher uncertainty than what we’re used to, that doesn’t mean we shouldn’t be investing. 

The post Why now is a great time to invest in ASX shares (even if you’re fearful of an uncertain world) appeared first on The Motley Fool Australia.

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• These were the best performing ASX 200 shares last week
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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