Why I like Crashes as an ETF Investor, visualized
I often see people panicking online whenever the market drops sharply. Mostly, these reactions are way over the top. For example during the early 2025 tariff crash, I read about the looming next lost decade (meaning no market returns for 10 years) from economy experts in newspapers, which is funny in hindsight.
As somebody who invests long term into ETF's I usually have the opposite reaction to a crash. I actually enjoy them! Let me show you why I think this way, by looking into the past:
Say you invested the same amount in an MSCI World ETF every month since 2009. The chart shows what each of those monthly purchases is worth today. Enter your own amount and currency (don't worry, all calculations happen locally in your browser)
Paid in
Best purchase
Assumptions
- The fund is the iShares Core MSCI World UCITS ETF (IWDA), bought at its net asset value on the 15th of each month from October 2009. The yearly fees are calculated at 0.2% per year.
- The monthly amount is fixed in today's money: earlier purchases are smaller by the inflation since then, using Swiss CPI, US CPI or euro area HICP.
- Each purchase is converted to USD at the exchange rate of its day. No trading fees, no taxes.
- Data from iShares, the US Federal Reserve (FRED) and the Swiss National Bank.
Cheap Months Buy More Shares
As you can see, as a long term investor, the profits you make on each monthly investment varies a lot. The general trend is, that, due to market returns compounding, investments further in the past have generated the most gains. But some months stand out as being especially good purchases. And those are the ones where a crisis hits. Just looking at the months right after the Covid crash of 2020 shows you that they were significantly more profitable than the ones preceding it.
Essentially, lowered prices scare people, but allow you to buy more shares for the same money. A crash only costs you if you sell, or stop buying, because you miss out on the cheaper prices. So the sweet spot is a crash that lowers prices, but does not affect your income source (without a job, you might be forced to stop buying).
This shows the sometimes counterintuitive nature of investing: The moments that feel like the worst times to buy are actually giving you the highest returns.