Despite Friday's huge jump in the S&P/ASX 200 Index, things are looking a little shaky on the economic front (not to mention the political front!).
The price of commodities are tumbling, with iron ore — our largest export — down to near 5 ½ year lows.
China — our most important export market — is facing chronic over-capacity and declining investment.
And last week we learnt the unemployment rate jumped to 6.4%, the highest it's been since 2002, and well above the 4.1% low of 2008.
Greece is again at risk of defaulting, and sending the EU into chaos.
And the list goes on…
The Reserve Bank is clearly worried too — after all, you don't drop interest rates in good times, especially when they are already at historic lows!
Worse still, Australians are heading into all of this with record levels of household debt. As bad as things are, they could get worse — a lot worse.
But despite all of this, I'm still investing in shares. Why?
Well, my money is no good in the bank — especially after that interest rate cut. When you factor in inflation, it's likely I'll lose money in real terms.
Property seems way overvalued, and I certainly don't want to leverage myself up in this environment. Besides, rental yields are generally pretty pathetic — more so when you consider interest costs, agents fees, rates, maintenance etc.
So shares seem like a good option — or more specifically, dividend paying shares. Especially when you consider those juicy franking credits, which help boost yields to levels that make term deposits and rental yields seem like a joke.
Take, for instance, my latest Motley Fool Dividend Investor recommendation, a company whose business is extremely resilient to the ups and downs of the economy, and that is offering investors a pre-tax dividend yield of about 8%.
And it's not alone; the companies on the Motley Fool Dividend Investor scorecard are yielding over 6.4% on average, when franking credits are included.
Of course, if we are headed into stormy waters, share prices could well take a beating. But that doesn't concern me either. The reason being is that when you invest in quality companies, the price decline is always transient. Moreover, the best companies keep throwing off dividends in good times and bad.
Consider Woolworths Limited (ASX: WOW). Since the supermarket juggernaut listed in 1993, shareholders have had to endure all kinds of disruptions, and not just economic ones.
Despite the ups and downs of the share market, despite wars and economic calamities, despite the introduction and reinvigoration of intense competition, and despite the occasional corporate misstep, Woolies has continued to throw off steady, and ever increasing dividends.
That's one of the key hurdles to overcome when investing in shares; ignoring all the negatives out there. As scary as things seem today, we must remember that things are almost always scary — you never have to look far to find a reason not to invest.
If you are waiting for all the world's troubles to clear up before you invest, you could be waiting a very, very long time… In fact, it's the times when the market is at its most optimistic that usually turn out to be the worst times to invest!
Even if the share market crashed tomorrow, we can never know how long the declines will last, and how far the market will fall.
We may like to tell ourselves that we would 'load-up' after the next crash, but that's far easier said than done.
Most of us will be so paralysed by fear — a fear that will be fed by all manner of doom and gloom headlines and 'expert' predictions — that we probably won't do anything at all.
And despite all the worrying signs that we see today, the market could continue to track much higher before the next bear market arrives. It wouldn't have been that hard to paint a depressing economic picture a few years ago, and yet the market has made impressive gains since then.
That's the other problem with waiting; by the time the next crash occurs, the market could be 30% higher, and any subsequent falls may only return us to where we are today.
So that's why I'm investing in shares.
And not just shares in companies like Woolworths — but other great 'under the radar' companies that are financially strong, have bright futures and are run by some of the countries most capable and honest people. Importantly, companies that are well positioned to withstand the inevitable economic bumps that are headed our way.
As long as there are great companies, with attractive potential, offering great dividend yields, I'll be a buyer. And if I must endure some volatility along the way, so be it.
In the long-run, it will be worth it.
