I have talked to a lot of people and many are afraid to start investing. The biggest fear is usually that they will invest money and the market will crash the next day or even the next year. It is a valid fear. Since 1990 the stock market has ended at a loss for 9 years but for 23 years it has ended the year on a positive note. There have been many more ups and downs during each year. So the market has been down 28% of the time but up 72% of the time. Overall, those are good odds!
The first thing to think about investing is that it should be for the long term. When considering if you should invest you should think about if you’ll need that money in the next 5 years. If you will it’s probably best to just leave it out of the market. In a 5 year time period there is a good chance that there will be at least 1 year that is down. Of course any year there is a chance the market will go down, so if you need to keep your money it’s best to just hold it in cash.
Investing is partially a psychological game you play with yourself. You need to teach yourself to be ok with “losing” money, temporarily. Of course if you are investing for the long term, you never lose money, as long as you don’t sell at a loss. But there are many times where on paper your investment will look like it’s down.
Before you invest, you should think about how you would feel if your investment “lost” 50% of it’s value. If it makes you nervous you need to think about why. Since you are investing for the long term, a loss of 50% is really a great opportunity to buy more! If you aren’t comfortable with this idea you need to become comfortable with it before you invest.
These are all things I can help you with via financial advising.
If you’d like help determining if you should invest or in what accounts or funds, contact me at hooglandaxel@Highland-WealthManagement.com or call at 715-820-0377
Initial discussion is free!