Investing for the long term

What should I do when the market turns negative? Well, let’s have a look at the market over the last 100+ years (Feb 1915 to April 2020). I’ve generated a chart of the Dow Jones below (please note the y-axis is on a logarithmic scale). The chart looks pretty good if you ask me. It is clear that the direction of travel is up.

Dow Jones February 1915 to April 2020, logarithmic price chart, recessions in gray

That chart gives me a lot of confidence in investing and not worrying about the noise or news or the latest tweet from a president. Things will work out in the end. They always have – after two World Wars, many crashes, many recessions, many scandals etc and now probably after this pandemic as well.

I’m 32 years old and am expected to live until 85 according to the ONS. So, I’ve got 50+ years left in the tank. Even after I retire, I will continue to be invested. Therefore, my investment time horizon is my entire lifetime.

So, is now a good time to invest as markets have come off 20%+ from their highs? Based on the long-term chart, yes and in fact, any time is a good time to invest.

I will continue adding to my portfolio as I normally would even in the current investment climate and hopefully, my wealth will look a lot like the Dow Jones chart over time.