The obsession with the price of shares usually ignores the return or the income that is generated from investing in the market. “Will shares go up or will they go down”? These are the doubts and fears that paralyze us when deciding to invest. These short-term decisions ignore the simple fact that shares are an investment that generate an income through dividends. Fluctuations will happen it’s the nature of the market. If you considered investing in property 30-40 years ago you may have experienced the same doubts. You may have thought when you initially purchased a residence that you were paying too much. It’s a similar sentiment with shares, however the volatility in shares is reported on more as it makes for good news and that makes people nervous about investing in a different asset class.
Creating wealth is really about choosing the best asset to invest in. Over the long term, the total income derived from shares will exceed the interest payments on term deposits, even though the initial yields are higher. With the interest rates falling (the RBA meets on the 7 April) it makes sense to begin investing in shares and creating an income for later on.
