Market crashes are usually met with panicked headlines, flashing red tickers, and a palpable sense of impending doom.
For most, a downturn feels like a disaster.
But at 25, this is actually a golden opportunity to lock in your long-term holdings at a huge discount.
In this article, we’ll look into why downturns can actually be a powerful advantage for young, long-term investors.
Why Market Crashes Feel So Painful
Due to loss aversion, the “pain” you feel when your portfolio drops from S$10,000 to S$7,000 often feels more intense than the “joy” of seeing it rise to S$13,000.
And the media just loves to rub salt in the wound by always focusing on short-term chaos and sensational headlines about ‘trillions in market value evaporating’ overnight.
As a result, many people start thinking short-term and sell at the exact moment they should be buying.
The Advantage of Being 25: Time Is Your Greatest Asset
At 25, your greatest asset is your investment horizon.
With over 40 years of runway ahead of you, you have the luxury of time to handle volatility and wait for the market to recover.
Additionally, every dollar you invest today has decades to compound – a small contribution now could grow exponentially by the time you need it.
Lower Prices = Better Long-Term Returns
The fundamental rule of investing is simple: your long-term return is dependent on the price you pay today.
When a crash happens, you aren’t actually “losing money” unless you sell; rather, the market is offering you a huge discount on your future earnings.
Buying a high-quality index fund or stock at a discount essentially locks in a higher yield and greater capital appreciation potential for years to come.
The Power of Dollar-Cost Averaging in a Downturn
Market dips supercharge the power of regular investing.
It allows your fixed monthly contributions to accumulate more shares for the same amount of money and lower your average cost per share.
Furthermore, you foster the disciplined mindset required for long-term wealth.
Dividends Work Even Harder During Crashes
While capital gains might stall during a crash, your income stream remains the silent workhorse.
By reinvesting those dividend payouts when the market is ‘on sale’, you are basically ‘stacking’ more shares for free.
And by the time the market recovers, your portfolio’s growth trajectory will be far steeper than before.
Why Most Investors Get It Wrong
Panic selling converts paper losses into reality.
Those who try to time the bottom or wait for it to be ‘safe’ again usually end up buying back in at higher prices.
Ultimately, letting your emotions decide your strategy is the quickest way to destroy your potential return.
How a 25-Year-Old Should Approach a Market Crash
Your strategy should remain simple even when the market crashes: just keep buying.
Stay invested and maintain your regular contributions.
This is the time to avoid speculative hype and lean into blue-chip companies with resilient earnings and fortress balance sheets.
These heavyweights include DBS Group (SGX: D05) and OCBC (SGX: O39), which are the backbone of Singapore’s market and usually the first to benefit when the economy stabilises.
Over-concentration can also eat into your returns; therefore, it is necessary to diversify across different sectors.
Expanding into the industrial sector by including companies like ST Engineering (SGX: S63) or Keppel Ltd (SGX: BN4) can offer a buffer against local volatility thanks to their long-term contracts and global operations.
Real estate giants like CapitaLand Integrated Commercial Trust (SGX: C38U) can provide reliable passive income.
What Could Go Wrong (Reality Check)
A market crash will only be beneficial if you buy the right assets.
Some speculative companies may never recover from a downturn.
However, just because a company is large or well-known doesn’t mean it is immune.
Some former giants take years to recover, while others never see their previous highs again.
Investors must also not be overconfident, as this can lead to excessive risk-taking.
Crucially, ensure you have a robust emergency fund in place.
A crash often coincides with economic downturns; without a cash buffer, you might be forced to sell your holdings at the bottom just to cover living expenses.
Lastly, in an environment of short-term volatility, having a long-term mindset is vital.
Quality assets and liquidity are your best defences against the unexpected.
Get Smart: Make Full Use of the Market Crash
For young investors, a market crash is not a ‘threat’ but an ‘opportunity.’
With time and consistency on your side, market dips become a wealth-building catalyst.
The true edge for a 25-year-old isn’t avoiding crashes, but using them to your advantage.
Oil prices are rising. Markets are swinging. And headlines are getting louder by the day.
In times like this, many investors look for predictions. But in our experience, what matters more is having a framework.
In this upcoming webinar, Chin Hui Leong shares how we approach volatile markets through three layers: what to buy, when to deploy capital, and how to build conviction in the businesses we own.
Because uncertainty is not something to avoid. It is something to prepare for. Sign up for free here.
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Disclosure: Charlyn T. owns shares in DBS and OCBC.
