Go easy on your investments

Invest or no invest? That’s not even a debate. Rather, how to invest smart? It seems quite easy, but not straightforward, in actuality.

(Disclaimer: This is NOT FINANCIAL ADVICE. I can’t comment on your finances. Please do your own due diligence before investing).

Sharad’s Sunday Sojourns (week # 495 | 10th October 2021)

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” … Warren Buffett.

The plant will grow steadily and uniformly, right? That is the biggest misconception! And yet, considering ultra-long term, that is a hard reality! (Image source: Bioökonomie)

S&P 500? Dow ? Nasdaq?

Popular exchange traded funds (ETFs) or (rationally selected) stocks?

Highly volatile cryptocurrency (with potential high losses /returns) or the slow growing real estate (mostly tax-free long term)?

Bubble trading or margin-embedded day trading?

As you have noted, questions are many. And answers are scarce.

Before jumping on to the bandwagon, how many do you know who have become millionaires by keeping their money in their standard savings accounts?

So, we will assume that you are someone, who are not satisfied with the fact that inflation is virtually eating up your bank deposits, slowly and certainly.

Subsequently, it is a dilemma, which is the best investment vehicle to land us on a safe zone.

For most middle-aged souls, it’s the retirement or the threshold of retirement.

For the young ones, it’s mostly the ‘Wen Lambo’ situation.

For those, who are seasoned, it’s a matter of carefully balancing the portfolio so that you can safely lay down the 4% rule later on in life, provided you have reached your personal targeted nest bag.

For the ‘green’ investors and the starters, the decade-old S&P 500 Index has never disappointed long-term. Sure, hiccups were there in the past, but considering the 3-Year moving average, I would say it’s quite satisfying. (Image source: Wikipedia)

The point is, however, not the fact that investment is risky, or for that matter, perhaps a necessary phenomenon to safeguard yourself (like a hedge) from the clutches of inflation.

Rather, what path you choose towards realising that goal?

What is your risk tolerance level?

Is it better to choose a safe and sound ‘MSCI Core World Index ETF’ and earn around 7% CAGR for the next 30 to 40 years?

Or are you a ‘green’ investor, who look at charts literally every day, and are often depressed and elated, depending upon the bullish and bearish trends, respectively?

While value investing is eternal, time and again, people have proved that bubble trading (crypto, cannabis, and now, uranium) could land you to your desired target much faster.

Well, the reverse is also unequivocally spot-on, and should be carefully deliberated.

Bubble trading phases. While bubble trading is not for everyone, for seasoned investors, it can be quite rewarding. Buy low and sell high? Why not buy high and sell higher? (Image source: Forbes)

I often hear complaints and judgements in favour of not investing anything.

The principal argument is that majority probably does not want to lose money at any cost.

This is understandable.

Considering the fact that we are not sitting on a gold deposit or millions or billions of dollars’ worth of securities, an average investor is not protected against the downfall.

So, what’s the solution?

I have to say that’s an individual choice.

But the way I see it, debt ceilings are raised or lowered, it is utterly foolish to remain confident on the state-ensured pension schemes.

Even in the EU region, where most countries have sound social security systems, poor investment choices have landed a vast majority of the population over 65 years in real trouble.

While smart investing is a guaranteed hedge against inflation, the problem is that majority do not ponder over a well deliberated risk-return scenario. Think before you put your feet in the mud! (Image source: 4asbenefits)

It is clear that in order to streamline your future, rational choices should be made right when you are in your twenties or thirties.

The age-old wisdom of dollar cost averaging will be utterly beneficial in the long run.

After all, the market is volatile, but in the very long run, none have lost huge money by investing in the standard S&P 500 index!

Invest, forget and leave all the rest to the power of compounding.

It’s simple. You should make money while you sleep!

No wonder Einstein stated: “Compound interest is the 8th wonder of the world!”