Should you start investing in ASX shares?
It's a good question. The share market has been hit because of the impacts of the coronavirus in Australia and across the world.
It takes a brave mindset to want to start investing when the S&P/ASX 200 Index (ASX: XJO) just had its worst quarter since 1987. Since 21 February 2020 the ASX 200 has dropped by 27%. It's actually going up right now, it was down a lot further last week.
As investors the most important thing to do is to make sure you don't overpay for a share. It's the purchase price that defines our returns.
"Buy low (sell high)" is an easy thing to say, it's much harder to do. Shares only fall heavily when there is a reason for investors to be fearful. To take advantage of the low prices you need to get stuck in before the opportunities disappear from this sell-off.
COVID-19 is causing a lot of investors to be fearful. Share prices are a lot lower and so I think some of them are good value to buy today.
Exchange-traded funds (ETF) based on ASX shares or international shares have been sold off. So great ETF options like BetaShares NASDAQ 100 ETF and iShares S&P 500 ETF (ASX: IVV) could be smart long-term buys after their falls.
There are plenty of individual ASX shares that have fallen significantly that could be opportunities. Some of the shares I'm thinking about at the current prices are: Altium Limited (ASX: ALU), Brickworks Limited (ASX: BKW), Magellan High Conviction Trust (ASX: MHH) and MFF Capital Investments Ltd (ASX: MFF).
Time to invest?
The share market has returned an average of 10% per annum over the long-term including through periods of declines like the one we're going through right now.
Instead of being scared, I think it's a great time for people to start investing if they have the spare cash to do so. Obviously you need to take care of your basic needs first though.
You just need to decide which shares you're going to buy.
