Australia's S&P/ASX 200 (Index:^AXJO) (ASX: XJO) could reach 6,000 points this week, month, year … or not in the next decade.
But, I think it will reach 6,000 points sooner or later.
ASX 200
As can be seen above, the 'market' or ASX 200 has not reached the psychological — otherwise unimportant — level of 6,000 points for almost 10 years.
At the height of 2007 — pre-Global Financial Crisis — the banks and mining shares like BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) were roaring.
The Australian economy, too, was growing rapidly. And bank interest rates on mortgages were around 9% — just imagine if a mortgage was 9% today!
Yet, right now it seems that everyone is depressed about the economy. Record-low interest rates. High debt.
We're also fretting about Korea, Trump, that group in the Middle East and the Euro.
But, guess what, Australia's ASX 300 index is up — on average — 9.7% since 1970, according to Vanguard.
That turns $10,000 into $835,000. Even if you didn't add another cent to your investment.
But this is the important part, in that time we have gone through:
- The OPEC Oil embargo
- An Australian Prime Minister being removed from office
- The first Intel microchip
- Berlin Wall
- Vietnam
- Medicare
- Capital Gains Tax
- The internet going public
- Black Monday
- Superannuation being introduced
- The Asian currency crisis
- A dot-com boom and bust
- GST
- September 11
- Iraq war
- GFC
- Greece
- A Japanese Tsunami
- Trump
I could go on. And likely will, in a few years.
But my point is this: if you are a long-term investor, who cares what the ASX 200 does today, tomorrow or this year.
Stay diversified.
Reinvest.
Keep cash aside for emergencies.
It's that simple.
And if you're not a long-term investor (e.g. you're approaching retirement in five years), take some of your risk off the table. Or keep working if you want to fund a comfortable retirement.
I think buying shares in great Australian businesses will still be the best way to grow your wealth for years to come.
Even if the ASX 200 doesn't hit 6,000 points.
