Investing can get complicated but the objective is pretty simple: “buy low” and “sell high”. So why is it that so many people seem to do just the opposite?
SmartSalary is not licensed to give investment advice. We do, however, process hundreds of millions of dollars of voluntary superannuation contributions every year, so we are able to see some clear trends.
And what we noticed was that as the stock market turned down in 2008/2009, people began stopping their voluntary super contributions. In fact, the lower the market went, the more people stopped contributing.
On one hand, this makes a lot of sense. Why keep putting your money into a fund that is losing money? On the other hand, however, you can see that people were happy to buy when the market was at its highs but a lot less happy to buy when the market was much lower. Thus instead of “buying low” and “selling high”, people were in effect doing just the opposite!
So what do you reckon? What are your thoughts on this issue? Which of the below categories best describes your thinking?
