The year 2022 is certainly up to a bumpy start so far. It already feels very different to to the past 1,5 years, where it seemed like the stock market only knew one direction, up.
Since the start of this blog, it was always my goal to not only share moments with you when my investments are up in value, but also also openly talk to you when they aren’t performing as well.
That’s exactly what’s happening at the moment and it’s part of the journey.
As of Tuesday morning, the 25th of January, my favorite ETF, the Vanguard FTSE All-World, is down more than 7% since the start of the month.
That means my ETF portfolio lost more than 10.000€ in value over the past 3 weeks alone, ouch. But more on that later.
If you just got started investing into stocks via ETFs (which is what I do) or you bought stocks in general over the last 3-6 months, it’s likely your portfolio is in the red now.
Sadly, Crypto has not been doing any better, with Bitcoin dropping 23% and Ethereum by 36% this month alone.
I certainly can’t blame you if you’re feeling nervous as a new investor. Especially if you’ve never experienced sharp corrections like this before.
Please remember that none of this is investment advice, just my personal opinion based on my own experience as an investor.
Here’s What Happened
I don’t want to waste too much of your time discussing reasons why the market may have dropped, as it doesn’t really matter in the long run.
Right now, It’s probably a combination of the federal reserve in the US announcing a tightening of its monetary policy, conflict fears in the Ukraine and tensions between the US and China in Taiwan.
Also, we’ve seen amazing market returns of over 28% last year (in Euros). So maybe it was just time for a correction anyway.
There will always be new reasons to worry, just like there always have been in the past. But it’s never a good idea to let emotions get the better of you and influence your long-term investment strategy.
There’s one thing I always try to mention whenever I talk about ETFs, covering a broad stock market index: These are long-term investments, not something to jump in and out of based on the latest news paper article.
You should have a time horizon of at least 5 years, ideally 10 years or more.
And if you’re worried about rises in inflation lately, stocks have proven themselves to be a great hedge over longer periods of time:
Based on over 100 years of stock market history, I’m expecting around 7% returns per year on average long-term from my main ETF, the Vanguard FTSE All-World.
Of course, this average comes with a lot of volatility both to the upside and the downside, in the form of regular stock market corrections and crashes.
My ETF Portfolio: How Much I’m Down in 2022
That’s exactly what happened over the past few weeks. Here’s how my ETF portfolio, which I share with my wife, has been holding up:
Well, it’s not looking pretty in 2022 so far. Over the past month, we’re down more than 6%, or 10.048€ in value. We’re actually down almost 8.000€ (5%) last week alone.
But when looking at how our ETFs performed since 2017, things are looking a lot better:
As you can see in the monthly heat map from the image above, these corrections are just part of the journey.
Even in the midst of the current correction, we’re still up a total of 29.651€ since starting our ETF investments in 2017:
There’s a nice saying when it comes to investing: When in doubt, zoom out.
The long-term performance is what matters. Don’t get discouraged when the market moves against you in a given month.
Are Investors Scared? (Poll Results)
Before I tell you what I’m doing with my own investments, I want to share the results of a poll I did on YouTube last week. I wanted to get a better idea of how you guys were feeling now that the market dropped.
We had a total of 628 votes (thank you!).
- 42% of you voted for I’m excited to buy shares at a discount
- 3% voted for I’m scared. Why did I ever watch one of your videos?
- 47% voted for I don’t care, I’m investing long-term anyway
- 7% voted for Bye bye financial independence, is McDonald’s hiring right now?
I have to say, I’m really proud of how you guys voted. You all seem to have the right long-term mindset when it comes to your investments!
My wife chose the last option.
Luckily, my sources tell me she’s keeping her full-time job as a graphic designer as well as her monthly ETF savings plan, so it seems like there’s still hope after all!
Jokes aside, let’s get back to investing.
What I’m Doing (My Investment Strategy)
Our ETF strategy couldn’t be more simple.
We buy the accumulating Vanguard FTSE All-World (ISIN: IE00BK5BQT80, Ticker: VWCE) at the beginning of every month.
That strategy doesn’t change when the market moves in either direction.
Only sometimes, when I see the market drop by more than 3-4% percent and if I have some spare cash to invest, I buy some more shares manually.
That’s exactly what I did Wednesday morning (Jan. 19th) on Interactive Brokers:
I had a bit over 2.000€ available to invest, so I bought 20 more shares, only paying 1,25€ in commissions.
Note: I’m using the tiered pricing model. You can switch to it under account settings – IBKR pricing plan.
Of course I could have gotten even better prices when the market dropped a bit further, but nobody can successfully predict a market decline, so I don’t try to either.
As a rule of thumb, time in the market beats timing the market.
I just treat these corrections as an opportunity to buy more shares at a cheaper price. And at the end of the day, I was still able to get a nice 4% discount from my ETF’s all-time-high a few weeks ago.
P2P Lending for Diversification
This is also one of those moments where it’s nice to have a diversified portfolio, with part of my investments in P2P lending. P2P loans are generally uncorrelated to movements in the stock market and I’m still receiving my interest payments on a daily basis.
I’m actually seeing a lot more attention return to peer-to-peer lending as an asset class, now that the stock market has cooled off a bit and doesn’t feel like easy money any more.
I also added 2.000€ to a new platform on January 25th:
I’ll tell you all the reasons why I added Bondster in my next monthly update!
Stay Calm and Stick to Your Strategy
Hopefully now you have a better understanding of how I’m approaching market volatility and my portfolio losing over 10.000€ in value within a few weeks.
Corrections or crashes are part of investing. As long-term buy and hold investors in broad, low-cost ETFs like the Vanguard FTSE All-World, monthly movements don’t matter.
You should also never let emotions or noise from the latest news headlines influence your investment strategy. Moments like these can actually be opportunities to buy great companies at a discount.
If, for whatever reason, you’re convinced that the market is going lower over the next few weeks, here’s what you can do:
Split up the amount you were planning to invest into a few pieces and dollar cost average (or euro cost average) into the market, instead of investing all of it at once.
At the end of the day, you need to do whatever makes you sleep better at night!
Do the poll results reflect how you’re feeling as well? I’d love to know in the comments!
The Stock Market is Crashing (The Video)
- 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.
Hello Angelo, many thanks for the content you can providing to us, specially since I am just starting investing but your assistance with information about P2P made me start looking into it and start investing using ViaInvest.
Tried to comment on your latest youtube video, but my comment got deleted so hopefully I can get some feedback and your opinion.
Viainvest is now having loans for Sweden, Romania nd Czech Republic with 10% interest rate. Will this change your strategy in the platform and change the settings of autoinvest to minimum 10%? Until now, all my loans are on 11% (never got a project with higher interest) and never more than 2 days with money uninvested, but would like to hear your perspective with the experience and more cashflow on the platform.
Many thanks in advance.
My pleasure! That’s very strange, that shouldn’t happen (YouTube). Meanwhile all the actual spam (financial-advisor bots) never gets filtered out…
I’ve actually just been thinking about that today. I think I’ll lower my minimum interest rate to 10%/year on Viainvest, the Auto Invest should still pick up 11% interest loans as well from Latvia and Poland when they’re available.
I’m still excluding loans from the Czech Republic in my settings because they come with a withholding tax on interest payments on the platform.
Many thanks for your reply…youtube filtering seems to be a mess
I currently only have Sweden, Romania, Latvia and Poland as loan origin for the same reason.
even with this change the overall interest will always be at least 10% which is still pretty great. But soon will start on other P2P to have terms of comparison, probably Robocash or Mintos (if they become available for new investors). Once again, I really appreciate the time yo spend on Youtube, here and replying to the ones that reach you.