Earlier this month stock markets worldwide fell about 8-10% on average, with the S&P500 losing almost 200 points from its record high of over 2000 points and the Euro Stoxx 50 dropping below the 3000 points mark for the first time in six months. This unexpected downward move caught almost everyone by surprise. Over the last couple of days, however, most stocks have recovered from their losses.
On Thursday the European Central Bank did what a lot of folks thought unimaginable by cutting its interest rate by another 10 basis points, from almost zero to even closer to zero. “Super Mario” Draghi also announced the ECB would start buying asset-backed securities. Fully-fledged quantitative easing like the United States has put into place now is the only option left to fight the sluggish economic recovery and looming deflation in the Euro area.
Last month I wrote why I believe exchange-traded funds are great for people who want to start investing, but hardly have any experience at all. Over the past half year the rationale behind ETFs has taught me a lot about the ins and outs of the stock market. The experience of buying shares for my ETF portfolio has also been a tremendous practical learning experience.
About a week ago I explained why exchange-traded funds are, in my opinion, great for people starting out in the stock market. Being a brand new investor myself and because I want to put my money where my mouth is – although not really, because money tastes foul – I’ll explain my personal exchange-traded fund strategy and the current set-up of my portfolio. Hopefully this way people looking to become ETF aficionados pick up some useful tips and tricks to build their own portfolio.
Unless you plan on becoming a landlord or starting a succesful business to create passive income streams, financial independence will be a near impossible task without the help of the stock market. However, many people are reluctant to put their precious savings in the market for fear of losing them all, especially after the horror stories of 2008. In Belgium, for example, only 14.7% of all households hold stocks in their portfolio for a median value of only €5,100 – we are notorious for keeping massive amounts of money in savings accounts.