Investing in the stock market is one of the key ways to grow your wealth. If you save money but only keep it in cash for your whole life, you’re not going to be able to beat inflation. Sure there is risk involved when investing in the stock market. But there’s a wide range of investment types. And there are plenty of low-risk ways to invest in the stock market today thanks to ETFs, mutual funds, and more.
When I first wrote this post, I was feeling the pain of investing in the stock market. We’d recently gone through about a 10% correction. And I allocated 70% of my stable value fund back into equities. I also was thinking about how the new market concerns at the time are so much like old market concerns. History often repeats itself. Here are some of the things that were causing volatility at the time.
- Greece and the rest of Europe.
- China slowdown.
- Corporate malfeasance.
- Summer malaise.
- Concerns of Mitt Romney winning, making us all fend for ourselves.
Whether it’s presidential politics in Washington, weak economies around the work, unemployment, or corruption in the private sector, these issues are often recurring. But you can’t let problems in the world prevent you from investing. Learning how to invest in uncertain times can actually make you a better investor.
Ask These Questions Before Investing In The Stock Market
During times of intense market panic, you’ve got to ask yourself these questions before investing in the stock market.
- Who was the dummy buying the markets at its peak? What made them so bullish?
- What kind of bozo invests the majority of his/her net worth into the markets? Do they not believe in themselves more than entrusting the fate of their future in uncontrollable circumstances?
- How are dividend buyers feeling now? You know, the one who says “I don’t care what the market does because I’m getting a 4% yield”? Making a 4% dividend and losing 10% of your investment is a bad result.
- Is the world really coming to an end?
I care about absolute performance first. I’d rather be up 2% in a crappy year than outperform the markets by 20%, but still be down 10% for example. However, if I’m going to lose money, the second best thing is to lose less than everyone else!
Remember, The Game Is Rigged
If you are seasoned investor, you should know by now that the game is rigged. Underwriter Morgan Stanley telling their institutional investors that they cut estimates, but did not disseminate the info to all at the same time is a good example. What are you going to do about it, file a class action lawsuit if you were one of the retail investors who got screwed on your trades? Good luck trying to get anything back.
Meanwhile, investors who have at least $100,000 to deploy can invest in a structured product that provides 100% principal protection and 110% participation towards the upside of the Dow Jones Industrial Index over x amount of years. If shit hits the fan and the market goes down 50% from here, said investor will get all his money back plus a 0.5% annual coupon, which is still better than today’s 0.2-0.3% money market rates!
Meanwhile, for years, our Congressmen and Congresswomen could front run the very bills they were voting on!
Instead Of Getting Mad, Get Motivated, And Get investing In The Stock Market
You’re never going to become an institutional investor by definition. But you can certainly make and save enough money to invest money with an institutional investor e.g. a hedge fund. Just know that even institutional investors got hurt by the Facebook deal since they accounted for the lion’s share of the public offering at $38. They’ll at least have more recourse and knew more about what they were getting themselves into than the typical retail investor.
Even though private wealth companies such as Citibank charge 0.5%-1% annual fees to manage your money, they can buy mutual funds for you that cost 1-1.5% annually for only 0%-0.5% (different class shares), thereby negating much of your annual fees. In other words, for a net fee of only 0-0.5%, you get someone constantly looking out for your best interests while you get to focus on building your wealth in other ways.
If you have more money, you gain better access. With better access comes better knowledge. And with better knowledge comes a higher chance for greater fortunes and stability for you and your children. In other words, stop messing around! Get your finances in order with the help of my top financial products recommendations. Once you get into the wealth cycle, it’s hard to lose your edge unless you are a complete idiot.
Fight To Equal The Playing Field
At a friend’s gathering the other day, the President of the SF Public Library system talked about how libraries help equal the playing field between the haves and the have-nots. I couldn’t be more supportive of her words and the system in which she presides. Libraries not only provide a place for our youth to learn and grow, libraries also help empower us with knowledge so we can make better life choices.
The internet is like a library, allowing us to find categories of specific interest at a flick of a button. The internet is just a tad bit more interactive, with writers who will snap back at nonsensical comments.
I hope that reading this site is as educational for you as it is for me. I was poor once, but I’ve learned my way out of poverty. Just keep on reading those books and sites that interest you. Keep on consuming as much information as possible. The more you know, the better decisions you will make for the long run.
- How Can We Help Level The Financial Playing Field?
- Buying Stocks On Margin Is A Bad Idea: You Could Easily Lose Everything
- How The Rich Get Richer
- Investing In Options For Profit And Risk Reduction
- Top Reasons To Buy Gold
Tips To Build Your Wealth
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