I think we can all agree this has not been an easy year.
Apart from all the uncertainty regarding the still ongoing war in Ukraine, we’re seeing record levels of inflation across Europe as well as energy & heating costs that have multiplied.
To make things worse, the euro lost about 17% in value compared to the USD within a single year and yet, stocks have been performing very poorly, even when looking at their performance in euros instead of the dollar.
As of September 26th, my own ETF portfolio, which I share with my wife, is down -12% in less than 9 months.
In light of all of everything that has been going on, it’s completely understandable if you’re either demotivated as far as investing in the stock market is concerned, or if you simply don’t have much money left over to even think about investing right now.
If however, you do have some extra funds lying around that you’ve been thinking about throwing into ETFs for the long run, then this article is for you!
Among other things, we’ll be discussing the age-old question: Buy the dip right now or wait for lower prices?
You’ll also find out what I’ve been doing with my own funds lately.
Please don’t forget that none of this is investment advice, just my personal opinion based on my own experience as an investor.
I think we first need to have a closer look at the current situation. How bad is it?
My 1-ETF investment strategy (Vanguard FTSE All-World)
As you probably know by know, my favorite way to invest into stocks is to buy a single ETF, the accumulating Vanguard FTSE All-World (VWCE, ISIN: IE00BK5BQT80).
I just love how it enables me to invest into over 3.700 companies from all across the world, without having to bet on any country or sector in particular, all via a single low-cost ETF.
I’m planning to hold this ETF for decades, ideally forever and to only sell some shares when my wife and I are retired and we need extra money.
- If you’re looking for a low-cost brokerage account, I recommend checking out Interactive Brokers, my personal favorite. Meanwhile, here are the best alternatives and how to actually use each broker to buy ETFs.
Over the long run, I’m expecting yearly returns of around 7-10% per year from my ETF investments based on their historical data, with a lot of ups and downs in between.
Well, I probably don’t have to tell you, but this year has definitely been a rough year so far.
How is our ETF portfolio doing?
As I mentioned in the intro, my own 157.870€ ETF portfolio, which I share with my highly pregnant wife, is down close to -12% or -21.476€ since the start of 2022:
Luckily we’re still up about 22.800€ in total since 2017:
If you started your ETF investing journey more recently, then your portfolio is probably looking a lot worse right now.
When looking at justETF, we can clearly see that this year has been a roller coaster ride so far:
Over the past 10 years, we haven’t seen this many months with negative returns within a single year, ouch.
The stock market is down more than you think
Remember how I mentioned that the euro lost about 17% in value vs. the USD within a single year?
Of course currency fluctuations also impact our ETF returns.
As you can see, in US dollar terms we’re down way more, close to -23% since the start of 2022!
Now you might understand why US investors have been feeling the market crash more, but then again we have plenty of other problems to deal with in Europe right now.
Buy the dip or wait for lower prices?
Still, that’s all the information we have. I don’t see the point of going into all the reasons why the market has been going down, I’m sure you can find plenty of other sources talking about that.
All we know is that the global stock market is currently down -12% when calculated in EUR and about -23% in USD since the start of 2022. If you look around you, very few people are excited about investing into stocks right now. That usually means it’s a good time to invest.
We have no idea exactly when the market is returning to its all time highs, since market timing is a fools game. But, just like every other bear market in the past, this one will pass as well.
Let’s not forget, ETFs are long-term investments anyway. You should have a time horizon of at least 5 years, ideally 10 years or more. So there’s no point in analyzing the current market situation trying to figure out if prices are going to be higher or lower next month.
All we know right now is that we’re getting some nice discounts on our investments, meaning we’re getting significantly more shares of the best stocks from all across the world compared to just 9 months ago.
Which is why my wife and I have resumed our one ETF investment strategy, now that we finally finished all the baby preparation and the work on our new apartment.
I continued buying the Vanguard FTSE All-World on IBKR
Using Interactive Brokers, I tried to buy the dip on August 23rd, September 9th, September 16th and on September 23rd:
I actually recorded my last investment on Friday, here is the relevant part of the video. It may be helpful in case you don’t know how to actually place an order on Interactive Brokers.
By the way, I’m using the tiered pricing plan on IBKR to keep fees as low as possible. I’ve never paid more than 1,33€ (usually 1,25€) in commissions for my orders between 1.000€-2.000€ since making the switch. You can change it in your settings:
There you have it! I know investing feels a lot harder right now and is a lot less fun compared to 2021, so kudos to you if you’ve been sticking to your investment strategy or if you’ve been regularly buying the dip this year.
And if you’ve been waiting for the market to bottom, that’s fine as well. It’s your money and you need to sleep well at night.
Just keep in mind that trying to time the market only rarely works out and when it does, it’s mostly due to luck. There’s no way to successfully predict future prices.
Long-term, the global stock market trends upwards in price, which is why I’m once again seeing this as a discount opportunity to grow my ETF portfolio at lower prices.
Now that you know my personal opinion, I’d love to hear from you:
How are you handling the current situation?
Are you still buying the dip right now or are you waiting for something to happen before adding to your ETF positions?
And are you seeing a large difference in how much money you currently have left over due to the high inflation and the absurd energy costs?
Let me know in the comments!
Looking for more on ETFs?
- My Investment Tools
A list containing all my investments in P2P Lending, the brokerage accounts I use to buy ETFs, my speculative investments in Bitcoin and my free bank accounts. It even includes the tools I use for blogging and YouTube.
- P2P Bonus Offers
A collection of all the best, currently available bonus and cashback offers in the P2P lending space. Regularly updated.
Disclaimer: Investing involves risks of losses. You should always do your own research before investing into anything. Also, some of the links are affiliate links, which help support me, the website & YouTube channel. I only link to services I use myself, none of them are sponsored.