The truth can sometimes be harsh but is a necessary evil to better understand how the world truly operates. This is certainly the case in the world of investing, where nothing is guaranteed, everything is temporary, and you never know what the next day is going to bring. Here are four investing truths that you need to hear this year.
Investing Doesn’t Always Pay Off
The fact is, not all investments pay off. It’s as simple as that. Even when you invest in the “right” places, sometimes you simply don’t get a return, and may even experience a loss. This is part of the investment process; loss is just as integral to investing as are profit and gain. When you start investing, knowing you’re always taking a risk is an important, if not vital part of the process.
Once you understand that nothing is guaranteed, you can decide your risk tolerance, or how much you’re willing to risk losing. This will help you make better decisions about where and how much to invest. If you’re not willing to lose a lot of money, you’ll want to invest in “safer” assets, but if you’re something of a risk-taker, you can opt for riskier assets that might have higher payouts.
There’s a common misconception that all investors end up making millions on Wall Street, and this simply isn’t the case. Many investors lose everything they’ve invested in one bad transaction, and this can be financially devastating. Don’t make the mistake of thinking investing is the most secure way to make money; it’s a volatile and risky process.
Your Retirement Should Be Your Investment Priority
Most people think of investing as putting a few hundred dollars in stock and getting a big return later on. Realistically, the investment priority for the average person should be their retirement fund. If this isn’t something you’ve ever thought about, or haven’t begun investing in yet, you’ll want to pay attention.
Retirement investing is one of the most important financial decisions you’ll ever make. Without a retirement fund, you’ll be stuck living on your social security check once you retire, if there’s even any social security left! It’s estimated that by 2035, the trust fund will be unable to meet its financial obligations, causing a 20% reduction in all benefits. The bottom line is, you should only trust yourself to meet your retirement needs.
Since you can’t depend on social security, you’ll need to start saving for retirement as soon as possible. Ideally, you’ll start a retirement fund in your 20s, and have a few hundred thousand dollars saved up by age forty.
Investing can be a complex process. If you find yourself struggling to plan the financial details of your retirement, you can hire an advisor to take a closer look and guide you to an effective financial plan. You can compare the best financial advisors online for a better idea of who can offer you the best service and pricing. For more information visit CarefulCents.com or any other similar way.
Investing Isn’t For Everyone
The bottom line is that investing isn’t for everyone. Some people simply can’t stand the risk involved or aren’t great at managing money to begin with; let alone a complex investment portfolio. While retirement investing is something that should be on everyone’s mind, other types are simply too complex for people that know nothing about investing to begin with.
If you’re truly determined to learn how to invest, there are online courses and even apps available that can help you learn the basics of investing your money. From real estate investing in Los Angeles to the stock market and beyond, there are thousands of courses and a myriad of information available online.
Just remember that no amount of research can match the expertise of someone who’s been in the industry for a number of years. Financial advisors can provide you with valuable information on the investing process and help guide you to investments that work best for your financial situation. Don’t be afraid to ask for help if you’re new to the process or unsure how something works; it’s better to be safe than sorry when it comes to your money!
No One Can Predict the Future
While trends can certainly be predicted for a certain level of security, no one can actually predict what will happen in the future. The market can perform well one day, and look like it’s going to perform well for the rest of the week, and then tank the next morning. Recessions do occur, assets can be lost, and the future is full of uncertainty. That’s part of the risk of investing.
With an uncertain future and money tied up in that uncertainty, things can get pretty risky. Don’t mistake this as a plea for you not to invest; by all means, invest if you can! Just know that there are plenty of risks that come with the practice, and if you’re not prepared for the possibility that you could lose it all, you’re not ready to even think of investing.
Investing is risky by nature, but with the right guidance and clarity, you can begin investing in your financial future. Don’t be afraid to hire an advisor or ask for help if you’re new to the industry!