If you’ve considered investing but still find yourself hovering at the
brink, your problem could simply be that you’re not well-educated with the way
investments work. This prospect isn’t necessarily as dangerous as you think,
and the potential payoff is worth much of the risk. Consider these investment
facts and your outlook may change.
The Highs and Lows
Image via Flickr by Iman Mosaad
The largest drop the Dow Jones average has ever taken in a single day is
777.68 points. This happened on September 29, 2008. However, the Dow Jones
average saw its largest single gain less than a month later on October 13, 2008
when the index rose 936.42 points. This just goes to show that even major dips
in the stock market will level out given time.
You Can Obtain
Insurance on Investments
The Securities Investor Protection Corporation (SIPC) will replace stocks
and certain other securities in the event that a brokerage firm fails. To enjoy
this benefit, you must choose an investment firm that is a SIPC member.
It’s important to understand, however, that this is not the same as FDIC
insurance protection which exists for certain types of savings accounts.
Investing Can Have
Major Long Term Benefits
Many people hesitate to invest simply because it seems so risky. They may
fail to realize that they invest and take risks every day regardless. Buying a
new dress is an investment in your wardrobe. Driving to the store is a risk.
Neither decision is likely to impact your life several decades down the road.
If you invest instead in something like a 401(K), your contributions could give
you millions of dollars to retire on in the future. Make your risks and
Anyone Can Get a
Lucky Break on the Stock Market
Professional knowledge isn’t necessary for stock market success. A study of
more than 2,100 mutual funds revealed that there was no correlation between the
skills of the fund managers and performance of the funds. Much of what happens
in the stock market comes down to luck, meaning that anyone can get lucky.
You Can Minimize
Your Risk with One Simple Step
Investing in the index and not the individual stock instantly reduces your
risk in the stock market. A single stock can fall prey to problems within that
company. When you invest in the index instead, you’ll enjoy the same returns
with a lower overall risk factor.
Doesn’t Require As Much Time As You Think
While it’s important to stay knowledgeable about your investments, you don’t
have to babysit them on a day-to-day basis. In fact, the best investments are
long-term. Check up on your portfolio regularly, but don’t worry about buying
and selling every day to try to stay ahead of the trends. A simple strategy
with long-term goals is usually the best option.
Do your research, stay knowledgeable, and take advice from reliable sources
like Fisher Investments in
Forbes. With a balanced and knowledgeable approach, there’s no need to
hesitate with your investment future.