March 9, 2014

Striving to “play it safe” can have detrimental affects to your investment account. How? What can you do about these feelings?

3 thoughts on “March 9, 2014”

  1. Garrett Haag says:

    If you play it safe and do not invest and just keep the money in the bank you will not make any money, the interest will not keep up with the inflation, the same can be said for someone that has a pure bond account if the bonds are not very good, their return will not be good enough to retire on. You should invest your money in to an no load index fund that is fairly stable compared to most investments and keep it their as long as you can, so that the daily swings in the market do not affect it in the long run, you need to have a mix of stocks and bonds that gives you the right allocation that you do not panic and sell when the market is in a downturn, you should try to have your portfolio stock heavy when you are younger and can take the risk.

  2. Kat Graham says:

    If you want to achieve high returns on your investments, you have to take a higher market risk. Alternatively, if you take a low market risk, you will achieve a lower return. When it comes to investing, it is important to leave emotions out of the equation. If you want to be a successful investor, it is essential that you use your head and not your heart. Lastly, when investing, it is important to understand reversion to the mean. This helps you understand that even though some of your investments may not be doing so well right now, they will likely go back to their historical average. Patience is key.

  3. Mike Finley says:

    You both brought up very important points. Let’s review.

    Folks put money in the bank because it is “safe.” Safe from what? Market risk, yes. Inflation risk, no. There are NO risk free places to put your money. Once you understand that key point, you will be ready to venture out beyond your bank/credit union. You do this through education and learning about risk, time, and how markets work over the short term (speculation) and the long term (actual reflection of the companies that are traded on whatever market those investments are traded on).

    Follow Katherine’s advice. Take emotion out of the equation and focus on dealing with these matters from a rational, systematic point of view. Your financial future will thank you. Learn more on this topic by reading Financial Happine$$by Mike Finley and/or Personal Finance for Dummies by Eric Tyson.

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