Destroy Your Wealth the Easy Way
In a recent USA Today article, Financial crisis ushers in ‘The Age of Safety’ for investors http://usatoday30.usatoday.com/money/markets/story/2012-09-04/investing-stocks-safety-risk/57582840/1 , investors have over $9 trillion in bank, money market, and CD accounts. Want to destroy your wealth the easy way? Put your money in these accounts!
Investors are worried about the economy, the direction of our Country, and host of other items that have the investors mind all twisted up. Fear, panic, anxiety, doubt- all play into the investors mind when looking at their statements, wondering if they can lose it all.
When these emotions come into play, investors generally take the easy step- putting money into ‘so-called’ safe accounts. Unfortunately, they are trading off growth for safety. It’s often said, safe-accounts lose your money safely. These accounts are earning next to nothing, and probably won’t for years to come. And when factoring in taxes and inflation, and, lose of growth, it’s a 3-legged compounding monster that is destroying your wealth.
There is good news for investors, and putting your money in the bank, money market, or CD’s isn’t the answer. Investors should be, always, in the stock market. That doesn’t mean that 100% of your money should be in the market. There is an equation that is often used to determine how much you should have in stocks. If you were to take your age and subtract it from 130, that is a good starting point as to how much you should have in stocks. Your stock portfolio should not be invested in just one Country, sector, or industry- but fully diversified.
Investors who have maintained a diversified portfolio, with the right amount of stocks and bonds, have done very well over the last decade, while minimizing the risk in the portfolio.
If you would like more information on how to design a prudent portfolio, and maximize your portfolio for all economic and political situations, feel free to contact me.