Losing money to make money. Sounds completely counter-intuitive doesn’t it?

In actual fact, it isn’t. It is all a question of how long you should be invested for.

 

This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.

 

Let’s use AtlasTrend’s Online Shopping Spree Fund as a real example. The chart below shows the actual monthly total investment return for this fund since it was launched in November 2015.

AtlasTrend Online Shopping Spree Fund performance

What does this chart tell us?

  • Out of the 21 months since the fund launched, it has experienced 14 months of positive returns and 7 months of negative returns.
  • Despite 7 months of negative returns (including the month of January 2016 where the fund lost 5.06% in value when the broader share market also suffered significant declines), investors since the launch of the fund to 31 July 2017 have made a 18.87% total investment return.
  • If an investor who had panicked during the negative performing months because they saw an unrealised investment loss and chose to sell out, they would have missed out on the eventual decent positive investment return to 31 July 2017.

 

What are the key investment takeaways?

  • Always invest with a long term mindset: Performance of the share market can be lumpy. There will be periods when negative investment returns will occur and you may have an unrealised investment loss. However, it is vital not to panic when that occurs and remain committed to investing particularly if you continue to believe in the long term prospects of what you are invested in. For example, just because the Online Shopping Spree Fund declined in value for a few months in early 2016 didn’t mean the entire trend towards a growing online shopping industry had come to a halt.
  • Negative investment returns can be an opportunity: Some of the smartest investors around the world look forward to periods of negative investment returns because they believe it presents opportunities to invest in great companies at a cheaper price. For example, if an investor had invested in at the end of January 2016 when the Online Shopping Spree Fund had dropped 5.06% in value during the month would be making an investment return of 24.92% to 31 July 2017.

So yes, many successful investors will tell you that to make decent investment returns you need to be prepared to experience some negative investment returns along the way. The key is not to panic and assess whether the drop in value presents an even better investment opportunity as you build long term wealth.

 

Want to learn more about the Online Shopping Trend? Join AtlasTrend to discover a easy way to invest in online shopping and other mega trends.

Sign up to AtlasTrend for Free

 

About Kent Kwan

Kent Kwan is a Co-Founder of AtlasTrend, an online investment platform that makes it easy for anyone to learn and invest in trends transforming our world. Kent has over 15 years experience in financial markets including as Chief Investment Officer at Arowana International Limited, and roles at JP Morgan and Macquarie.

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