How does Coronavirus impact Australian ETFs?

Alright guys, ease up already. My inbox has been inundated these last few days and weeks with questions about – you guessed it – the Coronavirus!

So here we go, let’s see if I can provide some clarity for all the Aussie investors losing sleep over their ETF portfolio.

Richard writes:

Great resource you’ve provided.  Thanks.

Seeing as we’re in the midst of the Coronavirus Crisis – mainly in the sense of public and investor panic – what are you doing right now?

Part of me imagines “staying the course”, another “waiting for buying opportunities”.

Lindsay says:

Despite your bias towards Vanguard products, I’m interested to know what ETF’s you’d be considering after this recent pull back. And when to pull the trigger – now, or wait a while?

Linds, a tip. You catch more flies with honey than with vinegar. Take a note out of Richard’s book next time.

However I’ll make an exception given these are exceptional times and publish your question despite the opening dig.

As I’ve openly stated before: I am completely, hopelessly, 100% independent of Vanguard and all other ETF providers.

In terms of what ETF’s I am considering. I will be continuing to invest in the same ETF’s that make up ETF Bloke’s Portfolio.

You don’t change horses midstream and you don’t change your passive investment strategy when the market goes down (or up!)

In terms of timing, I usually add to my ETF holdings once every three months.

And now is no different.

Will the market be higher or lower in 5 weeks or 10 weeks from now?

Who knows! Who cares!

Will the market be higher or lower in 5 years or 10 years from now?

You can almost guarantee it will be higher. Perhaps much higher.

How do I know this?

90+ years of stock market history.

Broaden your investing timeline and you won’t stress over the day to day movements.

Or the impact of Coronavirus on your ETF portfolio.

Population increases, productivity increases, inflation increases.

Stock markets go up.

Now Jacob, who is just starting out, asks:

First of all, thanks for the great information provided on your website. It’s helped my research a lot.

Currently the Coronavirus is bringing a lot of volatility to the markets, ETF’s are down considerably. So, is this a good time for a first time investor to start out with a position in ETF’s?

On the other hand would the wait and see option mean missing the boat?

Once again thanks for all the info, and your time reading this message.

Jacob you are quite welcome. And thank you for the kind words, I appreciate it.

Linds, take note.

So is this a good time to start out buying Australian ETF’s?

Well let me put it to you this way.

Are the boxing day sales a good time to buy a new TV or couch?

Of course they are!

And why is that?

Because in the boxing day sales you are getting exactly the same thing you could in September but for a much better price.

That is the impact that this Coronavirus is now having on the stock market.

You can invest in exactly the same global companies as everybody else has been doing for the last few years, but now you can do it at a cheaper price!

To all you ETF investors who have been on the sidelines, this is the moment you have been waiting for.

But be sensible and follow the usual personal finance rules of life:

1. Make sure you have an emergency fund in case you lose your job
2. Don’t take out a loan to invest. Just don’t.
3. Don’t invest money that you need in the next few months or years. Although stock markets go up over time, you can’t guarantee where they will be when you need that house or car deposit

Now is a great time to start investing in ETF’s if you are in a financially secure situation. But then again, any time is.

If you start investing today, you can expect to continue investing for the next 20+ years. So whether you start today, last year or next year. It won’t make that much of a difference at the end of the day.

What makes a difference is choosing to start. And sticking to your strategy through the next:

• Coronavirus
• Global Financial Crisis
• 9/11
• Tech Bubble
• Oil Market Crash
• Black Monday

I guarantee you this won’t be the last stock market crash you have to live through.

And if this is your first? Then consider yourself lucky.

You’ve got plenty of years ahead of you to see growth in the stock market.

But only if you start investing.