Many investors, particularly new ones, spend a lot of time worrying about the prospect of a downturn. But guess what? A downturn in the market isn’t always a bad thing when you’re an investor. If you know what to do when a downturn comes, you can actually use these periods to your advantage. Part of investing in assets like shares and managed funds is accepting that you’ll see your investments go up and down in value from time to time. Don’t be too worried about that. If you don’t want to accept more risk, stick your money in a bank account. But if you want to try for a better return than bank deposit rates, that means you have to ride out some movement. When you know why you’ve invested, and what your strategy is, you can have the confidence to stick with it and make the most of the opportunities that arise in challenging times. Besides, there are lots of people who have made their money in a market downturn.
Over the last 50 years, there’s been a serious downturn in the market roughly every 10 years or so. It’s normal, and just the market doing its thing. Sometimes, you’ll hear this talked about as a transition from a “bull market” to a “bear market”, as was the case in March 2020, when a very long run of higher returns came to a halt as the Covid-19 pandemic spread around the world. (One definition of a bear market is
