Australia had its last recession in 1991.
While I lived through it, I wasn’t really concentrating on the fall of the share market. Learning how to use the toilet by myself and colouring in was taking up much of my time.
In 2008 when the Global Financial Crisis hit, I was 20. I remember receiving my $900 as part of Prime Minister Kevin Rudd’s Stimulus Package. I saved some of it but I also distinctly remember a close friend and I went shopping after we got it. I didn’t own any shares at the time and, by all accounts, Australia did quite well and managed not to fall into recession. As such, while I knew it was occurring, it didn’t have an enormous impact on my life.
Fast forward to the present day. Poopsie and I have a large investment portfolio. We both have superannuation accounts and we have a large personal portfolio. The majority of our personal investments are in index funds, with a handful of individual shares that we still have from before we discovered financial independence. I’m not paying any attention to our superannuation accounts. We don’t count these as part of our net worth as it’s such a long time before we can access them. However, our personal portfolio is definitely accessible and therefore an important part of our financial independence plan.
In recent weeks, the Australian share market has taken a beating, as have markets all over the world. The COVID-19 pandemic is not only a health crisis but it is creating an economic one as well.
The recommendation of many in the FIRE community is not to look at your accounts as it will only cause you to panic. But I’ve been taking the opposite advice.
I’ve been looking at our investment accounts a lot. I think that this is good opportunity for me to see how I respond when things aren’t looking rosy. I’m creating my own version of exposure therapy – by looking at our reduced portfolio regularly, I get more and more used to it (A Purple Life does something similar).
It has definitely caused me concern, especially the day our portfolio had dropped six figures, but I am getting used to it. I am remaining calm and reminding myself that this too shall pass. The markets will go back up and our early retirement plan will continue.
Of course, the big reason I can stay calm about this is because we have not recently retired. However, when we eventually do retire, we will need to cope with market downturns. I’m hoping that by exposing myself to it now, I’m decreasing the chance of freaking out when it inevitably does happen while we’re retired.
Have you been looking at your investments? How has it made you feel? Have you remained calm?