Ever since the Corona pandemic made the financial markets crash around the world, people were asking me about my investments. Apparently, other people were more concerned about my money than I was. When I first started with financial independence I was reading a lot of blogs and books on the subject. Especially, the blog of JLCollins and his book 'The Simple Path to Wealth' as well as the book 'Your Money or Your LIfe' by Vicki Robin and Joe Dominguez were very helpful. Apart from many tips, guidelines and insights on becoming financially independent they also talked about the stock markets and how they (seem to) work.
In the past decades there have been several markets crashes. Some big, some small. There has been an internet bubble burst in the 90's, a financial crisis in 2008 and the latest crash was caused by the pandemic, but there were more crashes. What they all have in common is that the markets always recover. Sometimes very quick and sometimes it may take some time to recover.
By reading all those blogs and books on financial independence I was prepared for a market crash. So, when my portfolio went down by approximately €120.000 in two weeks time, because of Covid19, I wasn't all that worried. Of course, I didn't like it, but I knew this was going to happen at some point and I know it will happen again someday. Thankfully, I was still working and making money so I could buy more stocks for a much lower price. Stock were on sale at the beginning of the corona stock market crash. I just had to keep calm and stick to the plan.
It didn't really take a lot of time for the markets to recover and in November 2020 they announced to important things. 1) Trump was no longer the president of the USA and 2) Pfizer had developed a vaccine that had a 95% success rate. These two news items were a huge boost for my portfolio.
I'm not going to bore you with detailed numbers, but I am going to share a graph of my investments. In this first graph you can see my progress. Clearly, something went wrong in early 2020. After that first hit, my portfolio has been rising, sharply, and I'm well on my way to becoming financially independent, or financially free as I like to call it.
I do worry sometimes that the stock markets are rising to fast. It feels unhealthy and I'm worried that another crash will happen sooner than expected. Currently, the housing market in The Netherlands is really bad. There's not enough houses on the market and those on sale are grossly overpriced. Also, rent houses are way to expensive. People in their 30's are still living with their parents, because they are unable to buy their first house. It is expected that house prices will go up another 12,5% this year. This situation can not continue and I'm pretty sure the Dutch housing market is going to crash someday. I'm looking forward for that day.
When you're investing in financial independence you're in it for the long run, so you need a long term vision. Don't worry about stock markets crashing. They do that all the time (roughly once every 10 years or so). To put things in perspective, here's a graph of the global stock market over the last 20 years. This graph includes the financial crisis of 2008 from which we recovered in 2012.
So, how are my investments doing? GREAT! Am I worried about the future? Sure. What am I doing about that? Keep calm and stick to the plan.
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