A while ago (for privacy sake I often don’t mention specific people or time frames) I was talking to a fellow father, and we began discussing investments, and the same came up yesterday with another friend – so here some thoughts on investing.
I don’t like dishing out advice in regard to “what,” but I don’t mind sharing the “how’s.” Here are a few thoughts about investing in the market. (I will not go into depth, neither stocks nor cryptocurrencies, etc.)
A lot of people are worried about where we currently are and what is going to happen. The U.S. money printer is printing and printing, Corona took a toll on many economies over the past two years, and a variety of other factors, however over the past year people have been taking their cash and stashing it into the markets, especially stocks. Now when it comes to collapses, the only thing I can say is to stay cool and not gamble. People have predicted societal and economic collapses since the Stone Age. Whether it was Ragnarok, the Mayans and 2012, or Armageddon. The thing about this is that it has not happened, and should it happen, your stocks and investments will not matter anyhow. The markets tank, healthy corrections are needed, and I believe we are looking at one large wave coming down soon. Am I timing the market based on reading the Buffett indicator, the S&P, etc?
Keep in mind, all those magazines and websites that dish out advice on what to buy and when, is like me telling you to go into a casino and play the slot machine in the 3rd row, and six from the left. Many don’t really know where we will head to. Some predict that consumer cash flow will rise next year by 2%, and go even higher, meaning the markets will rise again, others predict the end of it all and recession for years.
To me, it’s a long game. Not a get-quick-rich scheme. If your portfolio is dropping by 10, 15, 20, 30, or even 50%, and you are not comfortable with that, then you may not be fully ready to be investing in the markets.
In other words;
- You are not confident about your investments. Not worrying about the long term is you being confident enough to hold through. Short-term swings are always expected.
- If you seem to be taking more risks than you are comfortable with, then you may want to look more into bonds than stocks or crypto, etc.
- You are utilizing the money that you may need within the next 5 years.
What to do about it?
Be confident with your picks.
- If you read all the analyst’s picks, and news, and try to time the market, yes, you just might get rich, but more likely than not, your chances of losing are higher. If all these analysts knew what they were doing, then they would all be billionaires. That is not the case. Write down why you are buying a certain company or investment. If you do not feel comfortable selecting individual items, go for a VTI or fund.
Take less risk
- Allocate a larger portion of your money into bonds.
Get your budget in order
- Before you invest, you should pay off any debts, have a 6-12 month emergency fund, and learn to live within your means. Take the rest of your money you feel comfortable losing and invest that with the mindset of “I don’t need this.”
Experience a crash
- Go through a crash and just see what happens. Anticipation is scary, but again, it’s not a get-rich-quick thing. Keep a strong gut, don’t sell, and you’ll be fine down the road.
That being said, do your homework, and take your time. There is so much material out there to learn, learn, learn. And then invest, invest, invest.
Let me know what you think in the comments below, or reach out on Twitter.
Note: This is not financial advice. Just amazing thoughts. 🙂
Make it happen.