What should you do when the stock market is volatile?
Market volatility and periodic corrections are normal for the stock market and typically do not significantly affect the long-term results of open-ended fund investments. When there is market volatility, VinaCapital conducts thorough analyses to determine whether these fluctuations impact the performance of the companies in which it is investing for the long term.
VinaCapital meticulously analyzes companies' financial conditions, business models, long-term strategies, and detailed factors such as products, raw materials, competitors, and market share. During market fluctuations, VinaCapital often seizes the opportunity to buy targeted stocks at lower prices.
Investors can apply a similar strategy by purchasing more fund units at favorable prices to achieve higher returns when the market recovers. Additionally, consider implementing a periodic investment strategy to benefit from dollar-cost averaging and to have greater peace of mind during market fluctuations.
Why should you invest in open-ended funds long-term instead of timing the market?
Investing in open-ended funds for the long term rather than attempting to time the market offers several benefits:
1
Compound interest advantage
Long-term investing allows compound interest to work effectively, helping your assets grow over time.
2
Reduced market risk
The stock market is inherently volatile, and trying to time the market can result in poorly timed buy and sell decisions. Long-term investing helps you ride out market cycles and reduces short-term risk.
3
Lower transaction costs
Frequent buying and selling to time the market can increase transaction costs, affecting overall returns. Long-term investing minimizes these costs, with sell fees decreasing as the holding period extends.
4
Reduced psychological stress
Timing the market requires constant monitoring and quick decision-making, which can be stressful. Long-term investing allows you to focus on your main goals and reduces pressure from short-term market fluctuations.
5
Discipline and patience
Long-term investing requires patience and discipline, helping you avoid emotionally driven decisions.
6
Benefit from economic growth
The stock market reflects long-term economic growth. By investing long-term, you can benefit from this growth.
In summary, long-term investing in open-ended funds is a strategy that helps mitigate risk, harness the power of compound interest, and ensure favorable returns.
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