The Risk Level of Investing in Individual
Stocks and Stock Mutual Funds.
We all hear so much about the stock market
being a "roller coaster ride." Is it safe to invest
in stocks? Definitely, if you do it correctly. As with most
things, there is a right way and a wrong way. The wrong way
includes investing all your money in just a few assets. As
the saying goes, "Don't put all your eggs in one basket."
Our recommended portfolios will help you to stay diversified.
Another common mistake is investing short-term
money in stocks. What we mean by that is if you are going
to need to sell your stocks soon to buy a
house, car, etc., then don't invest that money into the stock
market. The only safe way to invest in stocks
is to keep your money in the stock market for the long run.
Studies show that the market as a whole has never lost money
over any twenty-year period. So even if you have been the
world's unluckiest investor, you wouldn't have lost money
over a twenty year period if you had been invested in a large-cap
index fund.
That's precisely why the majority of retirement
money is invested in the stock market; it won't be needed
until years down the road and stocks historically have the
highest rates of return. Give it time and you can watch your
dollars grow significantly.
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