ASX shares are a little bit all over the place right now. The seesawing S&P/ASX 200 Index (ASX: XJO) is seeing bigger swings each day. And there are still so many unknowns. How long will COVID-19 continue to hurt the economy? How will Aussie businesses be affected? What will the final government stimulus look like?
Amidst all the uncertainty in the market, it can be hard to know when is the right time to buy. Here are a couple of things to consider if you're looking to invest in ASX shares.
Don't try and time the market
There's the old saying that, "time in the market beats timing the market". I believe this and it has held true over a number of studies. When even the professionals get this stuff wrong, your average investor is unlikely to do it consistently. I'm a firm believer that a long-term outlook and a diversified portfolio is the best way to build wealth.
Trying to time the market presents a few problems. One of the big ones is the opportunity cost of lost gains. If you spend the next 12 months sitting on the sidelines in fear, you could miss a strong rebound once the COVID-19 impact passes. The stock market is inherently forward-looking so ASX share values should be pricing in some of the future risks.
Invest in quality ASX shares for the future
I'd prefer to hold a diversified portfolio of ASX shares to weather the storm. Personally, I'm keeping an eye on Telstra Corporation Ltd (ASX: TLS) and AGL Energy Limited (ASX: AGL) because I like the non-cyclical nature of their earnings.
If you want to invest a little more tactically, you could buy Aussie supermarket shares. For instance, I would expect some of this panic buying to filter through to quarterly earnings for the likes of Coles Group Ltd (ASX: COL).
However you choose to invest, you should do so in a rational manner. Don't panic buy or sell, but consider what the next 10 years might look like and invest in ASX shares with that in mind. And most of all, try and get into the market once you have your personal finances in order to make the most of the upside potential.
