Consistent investment over a long time horizon is key to wealth growth

2022 is not a good year. Inflation is at all time high due to the surge in demand as economies reopen but there was not enough supplies due to the drop in productivity from the COVID-19 lockdown. Furthermore, the Russian invasion of Ukraine have sent shockwaves throughout the energy and food industries, adding more fuel to the fires of inflation.

The United States Federal Reserve raised interest rates several times over the past few months to deal with persistently high inflation. Europe’s central banks also raised their rates as well. The stock markets across the world fell in response to such actions, wiping out trillions of dollars.

For those of us who have just started on their investment journey, it can be a painful process as you watched the value of your holdings fall. But, that does not mean you stop investing. In fact, it is the best time to invest now because the prices for many of the stocks and indexes are lower than before. If you were investing using DCA technique, then with the same amount of money you can buy more of the same stocks.

Now, short of an extinction-level event that threatens to wipe out humanity, the financial market will always recover after a major event such as war, disease and natural disasters. This Russian invasion will end one way or another. Inflation will come down. Food prices will stabilise. When the market recovers, the valuations of those stocks will rise again. If you have been investing consistently, you will find your wealth and net worth grow in tandem. But if you have not, you will find that you lose out in the end and time is not on your side if you start late.

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