We’ve all heard about the stories where people made an investment and within weeks or months they were able to turn that around into a huge profit. In some cases these people were able to retire off of their profits. While this does occur I would hazard a guess to say this is the exception rather than the rule.
Investing is long term
When we make an investment the goal is to maximize our returns over a period of time. With the markets in the crappy situation they’re in many people are seeing investing as risky and shying away from it. The reality is that I’ve always seen investing as an activity that is tempered by risk tolerance.
Assume the quick buck doesn’t exist
If you go by the assumption that an investment is going to be a long term activity you’ll plan your risk and potential return based on that. My retirement portfolio had lost over 30% when I checked it last a couple months back. While its slightly demoralizing to see my money simply vanish its also something I knew could happen and I wasn’t worried. I won’t be needing my retirement money for another 30 or so years so there is no point in worrying about it just yet.
Keep an eye on investments, don’t obsess about them.
If you put your money into an investment and simply forget about it then you run the risk of loosing it without knowing about it. Conversely if you’re watching your investments and changing them around too much you also run the risk of moving money at the wrong time.
Investing money you need is stupid
There are very few investments that warrant going into some form of debt for them and even then I would warn against it. Invest money you can potentially stand to loose (at least in the short term). Investing in things like mutual funds, index funds or even specific stocks are long term and should be treated that way. This is especially important to keep in mind when the markets go through a correction like we’re experiencing.