Last week was a rough week for ASX shares and the S&P/ASX 200 Index (ASX: XJO). Between Wednesday morning and Friday afternoon, the ASX 200 index lost approximately 3.25% of its value.
With falls like that, many ASX investors or would-be investors might be feeling a little spooked and, therefore, reluctant to invest any more cash into ASX shares this week — what if the markets fall further? Some might even be thinking about selling out of their shares so they don't lose any more capital.
These are all understandable emotions to be feeling. After all, no one likes losing money.
But here are three reasons why we should all be buying more shares tomorrow when the market opens.
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3 reasons to buy ASX shares tomorrow
No one can time the market
History has proved time and time again that attempting to buy or sell shares based on what you think might happen in the short term is folly. Sure, shares might have an even more terrible week this week than they did last week. But they could also have a cracker. We could also see a big fall tomorrow, followed by an even bigger rally on Tuesday.
Anything is possible on the share market, and this makes it impossible to anticipate what might happen next. So rather than worrying about whether the markets will be green or red tomorrow, what we should all be pondering is the underlying quality of the businesses we are invested in.
If our companies are sound and produce products or services their customers love, chances are their stock prices will do just fine over time.
ASX shares go up more often than they go down
If you drown out all of the short-term noise, it will be a lot easier to focus on one simple fact: the share market goes up far more often than it goes down. The ASX 200 has never failed to exceed a previous all-time high, and no stock market crash has ever caused permanent damage to the share market.
So with this in mind, it's easy to conclude that the cheaper ASX shares are, the better it is for all investors who are buying. I would much rather buy shares at Friday's prices than at the prices we were seeing back in February, for example.
In fact, many of the world's most successful investors, including Warren Buffett, tend to do most of their buying during a bear market.
Shares are the best way to grow wealth
If you don't invest in ASX shares tomorrow, have a think about what you will do with the money instead. If you need to build out your rainy-day emergency fund, then fair enough. But if you are considering investing in a 'safer' asset class like cash term deposits, you might want to reconsider.
Every year, fund manager Vanguard releases a chart that tracks the returns of every major asset class in Australia over the past three decades. Last year's report showed that ASX shares were one of the best-performing asset classes to own over the past 20 years.
By their calculations, a $10,000 investment into ASX shares on July 1, 1992, would have been worth $131,000 after 30 years.
In stark contrast, investing that money into property shares would have resulted in $90,000. But for an investor seeking the 'safety' of cash or bonds, it's grim reading. Our bond investor would have been left with just $56,000 after three decades, while the cash investor would be crying poor with just $36,000 in the bank.
Of course, past performances are no guarantee of future success. But it's a mighty big gamble to think that other assets will get you better returns than ASX shares over the coming three decades.
