Investment Markets Will Most Likely Recover
In order to get high returns on your investment over long periods of time (such as those targeted by the Balanced Portfolio), you need to invest a large proportion of your portfolio in shares.
However, share prices are volatile. Inevitably, there are times when share prices fall, causing the same anxiety that you are experiencing during the current crisis.
The good news is that in the past markets have always recovered from similar 'crashes' and, given time, moved to new highs.
The graph above shows the market crashes of the Johannesburg Securities Exchange (JSE) share index during the past 51 years. This somewhat unusual period was chosen to include the market slump of October 1969, which is the worst decline on record.
For each crash, the graph shows the extent of the 'drawdown', i.e. the negative return caused by the crash, and the period (in months) for the index to recover. It does not allow for the effect of inflation, which would make the recovery longer.