3 reasons you need to start buying ASX shares on Monday

There are few good reasons to avoid investing in ASX shares this week. But here are three big incentives to continue building your portfolio.

| More on:
three children wearing superhero costumes, complete with masks, pose with hands on hips wearing capes and sneakers on a running track.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Last week was a rough week for ASX shares and the S&P/ASX 200 Index (ASX: XJO). Between Wednesday morning and Friday afternoon, the ASX 200 index lost approximately 3.25% of its value.

With falls like that, many ASX investors or would-be investors might be feeling a little spooked and, therefore, reluctant to invest any more cash into ASX shares this week — what if the markets fall further? Some might even be thinking about selling out of their shares so they don't lose any more capital.

These are all understandable emotions to be feeling. After all, no one likes losing money.

But here are three reasons why we should all be buying more shares tomorrow when the market opens.

3 reasons to buy ASX shares tomorrow

No one can time the market

History has proved time and time again that attempting to buy or sell shares based on what you think might happen in the short term is folly. Sure, shares might have an even more terrible week this week than they did last week. But they could also have a cracker. We could also see a big fall tomorrow, followed by an even bigger rally on Tuesday.

Anything is possible on the share market, and this makes it impossible to anticipate what might happen next. So rather than worrying about whether the markets will be green or red tomorrow, what we should all be pondering is the underlying quality of the businesses we are invested in.

If our companies are sound and produce products or services their customers love, chances are their stock prices will do just fine over time.

ASX shares go up more often than they go down

If you drown out all of the short-term noise, it will be a lot easier to focus on one simple fact: the share market goes up far more often than it goes down. The ASX 200 has never failed to exceed a previous all-time high, and no stock market crash has ever caused permanent damage to the share market.

So with this in mind, it's easy to conclude that the cheaper ASX shares are, the better it is for all investors who are buying. I would much rather buy shares at Friday's prices than at the prices we were seeing back in February, for example.

In fact, many of the world's most successful investors, including Warren Buffett, tend to do most of their buying during a bear market.

Shares are the best way to grow wealth

If you don't invest in ASX shares tomorrow, have a think about what you will do with the money instead. If you need to build out your rainy-day emergency fund, then fair enough. But if you are considering investing in a 'safer' asset class like cash term deposits, you might want to reconsider.

Every year, fund manager Vanguard releases a chart that tracks the returns of every major asset class in Australia over the past three decades. Last year's report showed that ASX shares were one of the best-performing asset classes to own over the past 20 years.

By their calculations, a $10,000 investment into ASX shares on July 1, 1992, would have been worth $131,000 after 30 years.

In stark contrast, investing that money into property shares would have resulted in $90,000. But for an investor seeking the 'safety' of cash or bonds, it's grim reading. Our bond investor would have been left with just $56,000 after three decades, while the cash investor would be crying poor with just $36,000 in the bank.

Of course, past performances are no guarantee of future success. But it's a mighty big gamble to think that other assets will get you better returns than ASX shares over the coming three decades.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on How to invest

Warren Buffett
How to invest

5 easy steps to invest like Warren Buffett with ASX shares

It isn't as hard as you might think to invest like the Oracle of Omaha.

Read more »

A man leaps from a stack of gold coins to the next, each one higher than the last.
How to invest

Charlie Munger's 3 brutal steps to building wealth

Munger's advice still hits home.

Read more »

Person holding Australian dollar notes, symbolising dividends.
How to invest

Buy 3,401 BHP shares for $5,000 of passive income

Want a big income boost? Here's how to do it with this mining giant's shares.

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
How to invest

Beginner investors: Start with these 2 ASX Vanguard ETFs

No investor can go wrong with these simple ETFs...

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
How to invest

The $1,000-a-month ASX share investing plan for beginners

This is an easy way to grow your wealth over the long term.

Read more »

Warren Buffett
How to invest

The easy way to invest like Warren Buffett with ASX shares

It isn't as hard as you think to invest like the Oracle of Omaha.

Read more »

A laughing woman wearing a bright yellow suit, black glasses and a black hat spins dollar bills out of her hands signifying the big dividends paid by BHP
How to invest

How to build wealth on the ASX with just $100 a week

You don't need big sums of money to build wealth on the Australian share market.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
How to invest

How to build a $2,000 monthly passive income stream

Here's how anyone could build a meaningful income without having to break a sweat.

Read more »