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Speaker 1: Good morning, and welcome back to start here the very

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Speaker 1: special mini series within Sugar Mamma's Fireplay, where I answer

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Speaker 1: your real life money questions with practical, empowering general advice.

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Speaker 1: Today's question comes from Katrina, who has just started investing

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Speaker 1: in high growth ETFs with Vanguard, and she asks Catta,

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Speaker 1: as we will one day have another GFC style slump,

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Speaker 1: how long will it take for my portfolio to recover? Now?

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Speaker 1: This is such a great question because it's the fear

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Speaker 1: that sits quietly in the background of most new investors' mind,

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Speaker 1: and that is, what if the market crashes? What do

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Speaker 1: I do now? Whilst we can't predict the exact timing

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Speaker 1: or the length of the next downturn, what we can

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Speaker 1: do is learn from history, use smart intelligence strategies like

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Speaker 1: dollar cost averaging, and focus on the right goals so

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Speaker 1: that when those downturns happen, which they will, we can

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Speaker 1: not only survive these but actually and potentially come out wiser, stronger,

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Speaker 1: and maybe even richer. So let's answer this question together

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Speaker 1: the reality of when markets crash. Okay, let's start with

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Speaker 1: the truth here. Market crashes aren't rare. They're actually a

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Speaker 1: regular normal and very hot, healthy. Part of investing history

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Speaker 1: shows that major downturns, what we call bear markets, or

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Speaker 1: when markets fall twenty percent or more, happen roughly once

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Speaker 1: a decade. Some of these downturns are really short and sharp,

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Speaker 1: and they recover really quickly, like they're like literally a blimp.

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Speaker 1: You don't even realize and you blink and they're gone.

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Speaker 1: Like the COVID crash in March, which I think it

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Speaker 1: was twenty twenty where the markets actually fell almost twenty

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Speaker 1: percent in a single month, but then actually recovered in

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Speaker 1: around about four months. Now, that was actually the fastest

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Speaker 1: market recovery in history over the last one hundred and

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Speaker 1: fifty years. Now, other market crashes take a lot longer.

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Speaker 1: Market downturns that we started, I think it was late

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Speaker 1: twenty twenty one, which were triggered by the war in

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Speaker 1: the Ukraine, and then we of course had inflation starting

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Speaker 1: to kick in, we had supply shortages. It actually took

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Speaker 1: around about eighteen months for the markets to recover. And

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Speaker 1: if we look back even further, like the Great Depression,

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Speaker 1: where we saw markets fall almost eighty percent, it took

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Speaker 1: years to rebuild from that point, and the so called

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Speaker 1: lost decade, which is where the dot com bust was

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Speaker 1: shortly followed by the GFC that actually took more than

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Speaker 1: twelve years for the market to get back to their

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Speaker 1: previous highs. And then there was the nineteen seventies, you know,

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Speaker 1: the Vietnam War, watergate and the oil embargo, which caused

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Speaker 1: markets to have from there it took nine years to

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Speaker 1: actually recover. So what is the lesson here for all

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Speaker 1: of us? Well, crashes vary. No two crashes are the same.

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Speaker 1: Some are really short and relatively painless, whereas others are

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Speaker 1: really long and really difficult and challenging. But and this

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Speaker 1: is the most crucial part for you, Katrina, the markets

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Speaker 1: have always recovered, and they've not just recovered, but they've

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Speaker 1: gone on to set new highs for all of those shareholders,

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Speaker 1: all of those people like you and I investing. So

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Speaker 1: what can we use from history to help us make

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Speaker 1: become wiser investors? So morning Star start and morning Star

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Speaker 1: by the way, is a brilliant free resource for all

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Speaker 1: investors to use, and I highly recommend. But they have

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Speaker 1: some data that show if you've actually invested one dollar

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Speaker 1: in the US stock market back in eighteen seventy through

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Speaker 1: all nineteen crashes of the past one hundred and fifty years,

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Speaker 1: that one dollar would actually be worth over three million

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Speaker 1: dollars today, and that's after inflation. So yes, downturns feel

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Speaker 1: absolutely terrifying in the moment. They can really make you

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Speaker 1: question your decisions, but you've got to remember this, over

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Speaker 1: the long run, the trend has always been upwards. The

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Speaker 1: real cost isn't actually the crash itself, but it's the

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Speaker 1: panicking and then the selling crystallizing those losses when prices

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Speaker 1: are at their all time lowest. However, if you actually

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Speaker 1: choose to stay invested, history tells us that you're going

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Speaker 1: to be rewarded at some point. You need to be patient,

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Speaker 1: and this is why one of the best strategies that

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Speaker 1: you can use is a dollar cost averaging strate. You know,

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Speaker 1: by regularly investing the same amount, whether it's one hundred

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Speaker 1: dollars a month, five hundred dollars a month, orth five

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Speaker 1: thousand dollars a month, regardless of whether the markets are

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Speaker 1: high or low. Because you automatically buy more prices when

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Speaker 1: they're cheap and you buy less when they're expensive. Over time,

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Speaker 1: this has an incredible impact in smoothing out the overall volatility,

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Speaker 1: but also helps keep you on track regardless of what

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Speaker 1: the market is doing, you know, day by day or

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Speaker 1: minute by minute or second by second. So what is

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Speaker 1: my general practical advice for you, Katrina, and for everyone

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Speaker 1: else who is building a share portfolio and he's wondering

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Speaker 1: the same thing, you know, how long is it going

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Speaker 1: to take for my money to come back? And what

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Speaker 1: do I do with these market crashes? Well, here are

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Speaker 1: a few things I want everybody to keep in mind.

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Speaker 1: Whenever there is a market crash or even a market pullback,

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Speaker 1: stay focused on the dividends, not just the portfolio value.

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Speaker 1: High growth ETFs are obviously very volatile in the short

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Speaker 1: to medium term. They may feel like and look like

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Speaker 1: that they're going backwards during a crash or a pullback,

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Speaker 1: But if you look at the income that is the dividends,

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Speaker 1: often these continue to be paid even sometimes grow over time.

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Speaker 1: Now it is the dividends that are going to one

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Speaker 1: day help cover your bills and actually give you that

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Speaker 1: true authentic financial independence and freedom. So just look at

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Speaker 1: how much your portfolio is paying you in income, dividends

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Speaker 1: passive income every single year. Don't worry about what that

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Speaker 1: portfolio is worth because it's really superfluous. What is your

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Speaker 1: portfolio paying you. That's where your focus goes, and that

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Speaker 1: will help keep you stable and strong and focused. The

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Speaker 1: next thing that I strongly recommend is you think about

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Speaker 1: market crashes and pull back. As you know, stock takes

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Speaker 1: sale opportunity if you can keep continuing to invest during

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Speaker 1: these slumps, or even better, set aside a small buffer,

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Speaker 1: or you could call it like an opportunity find if

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Speaker 1: you like, so that when markets full you can actually

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Speaker 1: capitalize on this and buy more of the same quality

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Speaker 1: stocks and ETF solicited investment companies, and even diversify your

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Speaker 1: portfolio further at better value prices, cheaper prices. Because there's

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Speaker 1: a slump, there's a stock takes sale. Now. If you're

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Speaker 1: not in a position where you can do this, that

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Speaker 1: is perfectly fine. Even just sticking to that dollar cost

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Speaker 1: averaging strategy that I was talking about is still incredibly powerful,

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Speaker 1: particularly over the long run. The next thing I recommend

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Speaker 1: is sticking to your strategy, your game plan. You know,

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Speaker 1: it's funny, the hardest part of investing is not when

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Speaker 1: the markets are booming, but it's when they are actually

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Speaker 1: falling and everyone around you is panicking and almost telling

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Speaker 1: you to sell, and this is when your emotions really

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Speaker 1: be tested. Having a clear, long term game plan is

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Speaker 1: going to give you the courage to hold it steady

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Speaker 1: instead of making fear driven decisions which always come with regret.

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Speaker 1: And then, finally, for Katrina and all my listeners right

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Speaker 1: now who are investors, we need to accept that recovery

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Speaker 1: takes time. We need to be patient to have faith.

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Speaker 1: You know. The truth is we don't know when the

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Speaker 1: next downturn will happen and whether it will take months

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Speaker 1: or years or even a decade to recover. But history

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Speaker 1: shows us if you do stay invested in you know,

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Speaker 1: the rewards that you will receive will far outweigh the

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Speaker 1: short term temporary pain in your life. So how can

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Speaker 1: we put this all into perspective for you? Okay, let's

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Speaker 1: take your example, Katrina. Say you started with five thousand

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Speaker 1: dollars into this Vanguard high growth ETF, and you're adding

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Speaker 1: through a dollar cost averaging strategy, say four hundred dollars

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Speaker 1: per month. After approximately twenty years, assuming an average net

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Speaker 1: return of seven percent per annum, which isn't unrealistic, that

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Speaker 1: portfolio could be worth over two hundred and twenty thousand dollars. Now,

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Speaker 1: of course, along the way, you will most certainly experience

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Speaker 1: at least two, maybe three, or even four major downturns.

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Speaker 1: At some point your portfolio may even be halved. But

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Speaker 1: that's okay if you can keep investing, keep reinvesting all

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Speaker 1: of your dividends, of course, that goes without saying, and

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Speaker 1: keep your eye on the long term big picture and third,

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Speaker 1: passive income those dividends and whether they're growing or not,

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Speaker 1: you will give compounding interest the best chance to work

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Speaker 1: its magic for you. And remember, compounding interest really starts

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Speaker 1: to kick in towards the end. You've got to remember

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Speaker 1: it's not about avoiding these crashes and trying to strategically

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Speaker 1: time them and dig things. It's actually about managing your

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Speaker 1: own personal behavior and reactions through them. This is what

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Speaker 1: separates successful investors from just the average everyday investors. And

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Speaker 1: I have a feeling you're going to be a successful

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Speaker 1: investor because you now know this. So Katrina, to answer

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Speaker 1: your question, Unfortunately, no one can predict exactly how long

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Speaker 1: it's going to take for your portfolio to recover when

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Speaker 1: the next crash happens. It could be months, or it

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Speaker 1: could be years, but history is very clear on one thing.

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Speaker 1: The markets always recover and those who stay the course

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Speaker 1: are always rewarded. And myself, I have skin in the

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Speaker 1: game too. I'm an investor and I've always followed this

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Speaker 1: advice that I'm preaching right now, and I've never regretted it.

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Speaker 1: You know, your job right now is not to try

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Speaker 1: and time the market, so just park that idea. Your

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Speaker 1: job is to spend time in the market, focus on

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Speaker 1: building your passive income through those juicy, valuable, exciting, empowering dividends.

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Speaker 1: Keep investing as much as you can afford to regularly

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Speaker 1: through the good times and the bad, and if you dare,

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Speaker 1: if you can try and use these downturns as opportunities

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Speaker 1: rather than thinking of them as setbacks, Hopefully you'll now

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Speaker 1: understand why I get excited when the market does crash

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Speaker 1: and has pullbacks, because I go shopping for shares, which

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Speaker 1: means I'm buying more passive income streams. And never forget.

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Speaker 1: One day, when your dividends are paying your bills and

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Speaker 1: paying for your lifestyle, you will be so glad. You'll

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Speaker 1: be so relieved that you didn't like let the silly

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Speaker 1: short term fear rob you of what your long term

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Speaker 1: freedom is going to look like. So thank you so

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Speaker 1: much for Katrina for your really thoughtful question. And I

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Speaker 1: really hope that this podcast episode is giving you their

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Speaker 1: clarity and confidence that you are looking for to help

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Speaker 1: you stay the course and continue on investing in your

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Speaker 1: portfolio and your wealth creation strategy. Now, for anyone else,

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Speaker 1: if you'd like me to answer your money questions in

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Speaker 1: the next start Here episode, please make sure you send

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Speaker 1: me a DM on Instagram at Sugar Mama tv or

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Speaker 1: if you like, at Canna Campbell Official. As soon as

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Speaker 1: I see it. I'll make sure I come back to

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Speaker 1: you as quickly as possible. And if you found this

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Speaker 1: episode really helpful and you know of other people who

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Speaker 1: are investing and having the same similar questions or even

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Speaker 1: questioning themselves as to what they're doing, please make sure

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Speaker 1: you go and send them this episode right now, because

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Speaker 1: it really may help make a massive difference on their

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Speaker 1: own wealth creation adventure. All right, everyone, thank you so

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Speaker 1: much for listening, and a quick reminder to hold it

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Speaker 1: steady when markets get rocky. You're in it for the

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Speaker 1: long run and history favors the patient and consistent. I'll

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Speaker 1: see you next Monday morning on Sugar Mama's Fireplace Chow

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Speaker 1: for now,