Many people I meet now are discouraged about their investments or the stock market in general. They say that their investments have lost a great deal of money this year and they wonder, in many cases, if they should do something drastic like sell off, stop contributing, etc.
It can be a very unnerving time in the world of investing. It seems like yesterday that things were going like gang busters and all of the sudden it stopped. Unfortunately, even the best of investors can not time the market perfectly. Would that not be nice?
Most of us invest on emotion. Better said, we buy when the market or securities are up and sell when they are down. On thing to remember is that we are all investing for the long term Your expectation should not be to make quick money. If it is, that will lead to bad decisions and very risky investments.
Long term – what does that mean? Simply put, do your homework on investments and investing in solid mutual funds while you diversify your investments.
Homework? Look for solid mutual funds that have a long, successful, track record of delivering strong returns. Having a fund(s) that have been around through economic ups/downs, political elections and fiascos, natural disasters and whatever may happen – and the fund can still deliver a great average return is something that should be looked out.
There are other items to look at, but investing for the long-term is crucial.
Diversification is simply spreading your investment money across multiple areas of the stock market. Finding the best funds in these four to five areas will help you weather the investment storms that come up once in a while.
Those storms may be small or large, but looking at the long picture helps us realize that the storm will not last forever!