In a matter of seconds, global markets can take an unexpected turn for the worst. Stocks can suddenly drop causing many people to lose money instantly — some even their life savings. While these people frantically call their investment firms in sheer panic, brokers reassure their clients to hold tight and weather out the storm.
This was the case last Monday when the Dow Jones industrial average dropped more than 1,000 points, closing the day nearly 600 points down. Every channel across the country was covering the breaking news in what seemed to be apocalyptic fashion. Experts weighed in on why the market took a drastic plunge only to deliver more concern to investors everywhere as they tried to buffer reality by saying the market will behave like this from time to time to “correct itself”. But who can truly predict the market? These commentaries are nothing more than professional opinions, at that. Many can forecast, but no one truly knows.
Some investors live for the thrill of investing. The unexpected. The big payout potential. They believe that with great risk comes great reward. Others, however, don’t have that luxury and simply can’t afford to gamble on their savings, or retirement. Sure, the market will rally eventually, as history has shown us over time, but when will that happen exactly and for how long before the market plunges again? While investing in stocks may yield promising returns, those who do must definitely feel at ease with uncertainty. It’s not for everyone.
Younger generations may have the time to recover from losses, but for those approaching their 50s and 60s, a market drop like this, could deplete retirement funds across the world. This is why it’s commonly advised to diversify your portfolio and to move your money to safe, lowisk investments as you approach your retirement years. It simply isn’t worth the risk. You need asset allocation and a good risketurn ratio.
While some may have procrastinated saving for retirement, an aggressive investment strategy isn’t always the best option. While highisk investments yield considerable returns, playing “catch-up” will only leave you financially vulnerable when you’re depending on your investments the most. So. if you can’t afford to lose it, don’t invest in volatile markets. Search for investments that safeguard your money like our real estate limited partnerships, which yield returns between 4.5 percent and 6.5 percent.
Many experienced devastating losses last week, but that’s the risk you take when investing. While most will agree Wall Street is not a safe haven for your cash, many investors have earned a fortune in better times.
Are you willing to risk it all for higher yields?