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Given that many of us would rather not think
too much about our investments now, the following
ten thoughts are designed to be a quick read.
Thought 1: The Best Investment For Some
People May Be One with Low Volatility
Stocks are great except when they are falling.
So, if you don't like heat, you may not want to
be in the kitchen.
For all their volatility, stocks have proven to
be a good investment for those who could withstand
the drastic movements and hold on for 10, 20 or
even more years at a time. If you can't honestly
say this describes you, then forget stocks.
Thought 2: Don't Gamble - Invest.
If you were gambling, perhaps you had hoped to
get rich by riding the huge past gains of stocks,
the same ones chosen by the masses of other people.
If you were investing, you sought out holdings
that, while not chased after by most others, offered
the possibility of decent returns for those who
were patient.
Thought 3: What You See Is Rarely What
You Get
Most people think that what is happening in the
present foretells the future. However, in investing,
this is usually not true, especially when the
present "goes to extremes". After a
multi-year rally is rarely a good entry point;
after a multi-year fall is rarely a good time
to assume the worst.
Thought 4: Does Everything in Your Life
Go Smoothly?
More likely, most things do not. So, don't think
that it's going to be any different for investing.
We all face big setbacks and tremendous challenges.
That's how it is. But people who persist are usually
the ones who come out ahead.
Thought 5: Wake Up and Smell the Alternatives
The word "invest" has meant only in
stocks for far too many people. If you want to
do better as an investor, you should study up
on other options as well. Don't want to risk all
your money in stocks? Bonds are almost always
a better investment than money market funds and
your friendly bank.
Thought 6: Don't Follow the Advice of
Others When Making Your Investments
That's because everyone's situation and risk tolerance
are different. You shouldn't follow the advice
of anyone unless it fits with your picture of
things. However, you should listen to what other
people might advise and then see if, and how,
you might incorporate what they are saying into
your own view. The same is true if you pay an
advisor; make sure that advisor is on your wave
length!
Thought 7: The Next Ten Years May Not
Be So Good for Stocks
Although this may be true, what alternatives do
you have? Keeping your money in a money market
account? - probably not a good idea. Making sure
you own your own home? - perhaps, but face it,
real estate is subject to the same types of highs
and lows as stocks, and I don't think homes can
indefinitely go up in price at abnormally high
rates either.
Best idea: Invest in a variety of different things,
including a variety of different categories of
mutual funds, not just in large cap U.S. stocks.
Thought 8: Are We Really Headed Out of
Recession?
Well, that has certainly seemed to be the case
up to now. But what if the worldwide stock debacle
continues? It is hard to believe that if people
and companies have lost as much as it now appears
and this does not turn around soon, that our economy
can avoid turning downward. Ironically, if this
happens, as unfortunate as this would be for the
country, it would likely lead to continued good
performance for holders of secure bonds.
Thought 9: Are We Becoming A Country of
"Family Entrenpreneurs"?
Are we becoming a country where each household
primarily resembles a profit and loss entity,
almost like a separate business? Within such a
climate, many of us feel compelled to work ridiculous
hours and endure outlandish commutes. And we really
feel the pressure to be home owners and the resultant
pressure to maintain our home's value. And now,
on top of the other pressures, we have our stock
and mutual fund investments to worry about as
well? It's no wonder that we're all feeling more
than a little stress these days. It all seems
to revolve just a little too much around money.
Is this how you want to live? Let's think about
relaxing all this a little.
Thought 10: There are 10 Letters in the
Word "Investment"
If you think of each letter as representing a
year, then you will be reminded of the true purpose
of a long-term investment (as opposed to a gamble)
- to help you achieve a better life 10 or more
years down the road. Anything less than that means
you probably aren't really investing; you're probably
trying for something that's more like the lottery
than able to reliably help you reach your goals.
This article courtesy of http://www.investment-index.com.
You may freely reprint this article on your website
or in your newsletter provided this courtesy notice
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