Stock Market Investing
I think all of us know by now that the Stock market in drastically down. I personally am down 40% in my Roth IRA. I have been watching many so called financial gurus starting to advice a pull out of the market and spilt your money throughout safer investments like bonds and Cd’s.
As hard as it is to watch your investment shrinks, it is not the time to panic. Over the course of the Stock Market there has never been a loss over any ten year period. Investing in the market should be for five years or more so this should not be an issue. If you pull out now when it is down, you will fail to regain your losses and any potential profit.
Investing in the Stock Market should be for long term and should be done in Aggressive Mutual funds not individual stocks. Day trading is STUPID! If you have invested properly, you should do nothing but continue to do what you have been doing. Do you really thing all these companies are now worth 60% or less of what they once were? No, they are not. The market may sink a little further but it will recover and when it does, the profits and returns that are historic of the Market will return.
True financial wizards should not panic during times like these. If your financial person is suggesting pulling your money out of the Stock Market, I would find another financial adviser. If you are doing regular investing for long term goals, most of your losses will be flatten from cost averaging alone. Be smart and stick with your long term goals and do not panic.
This is advice free of charge! Others who are trying to convince you to pull out of the Market are trying to make a buck off your fear. Feel free to ask a question or leave a comment about this post!
Tags: fear, financial advice, Investing, money, Stock Market
January 21st, 2009 at 2:07 am
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
January 21st, 2009 at 4:19 am
Thanks Allen, I am glad you enjoy it!
January 24th, 2009 at 6:33 am
I agree it’s best to stick with your stocks, I think the pain will only last another year or two and then come right. In terms of investing in the sharemarket a couple of years is a pretty small time frame.
I also read somewhere that after the last great depression stock went up 70 percent in a pretty short period, and really who is going to be able to pick when the market will right itself.
Bryan - Frugal Logic’s last blog post..Wasting Money Is Linked To Laziness
January 25th, 2009 at 6:06 pm
Good to find your blog. By the way,… that Allen Taylor comment is a bot of some sort… I had the same comment on my blog when it was two months old, and I saw the same comment on another’s blog. He tends to take one of your articles word for word and repost it (steal it) on to his site. Of course those in the so-called “open source” movement won’t care about this.
But as for individual stocks vs. aggressive mutual funds, can I ask why you’re not recommending ETFs? Mutual funds are dead! They’re too expensive. And individual stocks don’t have to equate with day trading… you can be a buy and holder there, too…
MoneyEnergy’s last blog post..List of Companies That Have Laid Off Workers
January 25th, 2009 at 7:35 pm
Money Energy, that is a great question and I am glad you asked. ETFs are bascially like purchasing a bunch of different stocks all at once. They could cost much more in the long run due to the commissions charged for trading them. They are also not as well managed as mutual funds and the average investor neither has the skill nor the ability to actively work the stock market. Also for the average person, they are a little more complicated to understand and I never recommend any investment unless you fully understand it.
Mutual funds are far from expensive when you take in account the diversity you receive along with professional management. I recommend no load with low expense fees of under 1% a year. You should always look into the track record and find funds that have long term growth of at least five years but preferable 20 years. These are for investments of five years or more not for short term.
Now to address the individual stock. Unless you are a multi-millionaire, you can not diversify enough purchasing individual stocks. Buying two or three stocks causes the effect of putting your eggs in one basket. This is never recommended for someone looking to build long term financial security. It is much riskier than a mutual fund with a long track record.
The comment about day trading is what happens with many people who start buying individual stocks. The current conditions show that no one company is reliable enough to invest your nest egg in. Imagine if one of those companies was GM. You would have lost much more than the average market loss.
Thanks for the comment!
Bryan, you heard correctly! Pulling out now is like throwing a wade of money out of the window. The market will recover, it is just a matter of when. Then as it rises quickly, all the finance experts making big bucks will have their clients buying at the higher cost even after they had them pull out when the cost was down.
Keep investing on a regular basis monthly and you should be fine. Panic now and you could be eating Alpo in retirement.
Thanks for the comment!
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