The ups and downs of the market in 2022 have come to an end, and there are many soul-stirring investment stories buried under the swinging K-line. Spring, Autumn, Winter and Summer, cold and summer, some people choose to run away, some choose to "buy, buy, buy, sell, sell" frequently, while others stick to each other firmly and choose long-term investment, exchanging time for space .
"Being friends with time" is a principle that long-term investors believe in and practice. When many investors enter the market, they hope that their investment returns will snowball.
Let’s look at the long-term returns of index investment in from historical data. In the 16 years from 2006 to 2021, the CSI All Index, CSI 300, CSI 500 and CSI 1000 index have achieved cumulative returns of 571%, 435%, 756% and 851%.
The fundamental reason why investors' wallets can grow with the long-term rise of the index is that, over a longer period of time, index investment returns almost all depend on the profits and dividends created by companies. When the long-term market trend is upward and corporate revenue and profits continue to grow, the corresponding index will rise accordingly. Ordinary investors can share in the development results of a basket of high-quality companies by investing in index funds for the long term.
Of course, the market is always ups and downs, bulls and bears alternate, and being able to obtain better returns in the long term does not mean making money every year. Like the A-share index mentioned above, if one year is used as the observation standard, without exception, they all recorded negative returns in individual years. In 2016, the CSI 300 and CSI 1000 indexes ended in decline for 7 and 6 years respectively. The CSI All Index and CSI 500 Index both recorded negative returns for 5 years.
Since short-term market fluctuations are always inevitable, how can we increase the possibility of profit in index investment? The answer from John Bogle, the father of index funds, is long-term investment. He said: "What is gratifying is that the long-term returns of index funds can always make up for the short-term pain. At the beginning of its birth, index funds were designed for investors to hold for a lifetime." Investors can smooth the short-term fluctuations of the market through long-term investment. In the long run of time, short-term adjustments will become insignificant and will not affect the long-term development trend of the market.
Someone once asked, what if the cuckoo does not crow? Some people answer that it is not pity to kill them; others say: they will naturally cry when they are lured. Tokugawa Ieyasu said: There is no need to wait. Patience and waiting are also virtues when it comes to investing.
E Fund Index wishes you a good night.
Planner: Ding Jianming Xu Zhao
Copywriter: Zhang Lijing
Anchor: Liu Yingjie
Editor: Song Zhaoqing Wang Yin
