Ask portfolio managers and they will be obsessed with short-term risk, short-term fluctuations, market timing, volatility and so on and so forth.
Is it the right approach to investing though? Maybe yes for a short-term investor, maybe not for a long-term investor. Who are you, a long-term or a short-term investor? There are high chances that you are a long-term investor, especially if you are very young (e.g. 25 years old).
Even though you are in your 40s or 50s you would still classify as a long-term investor. But the key point here is to forget the short-term and focus long-term instead, because there is where value resides!
You have to understand that your investment strategy is to make money, over time, with the least possible hassle, and while having fun. This is possible and very rewarding, I can assure you. The trick is to have a strategy and stick to it, no matter the current market conditions.
As a matter of fact you would have made money by investing in the American Stock market (i.e. Standard and Poor’s 500 index) without worrying too much on what had been going on in the world all the way along. You will learn why here.
Having dealt with clients and friends money and investment strategies each one with unique preferences, has forced me think about what is the right investment horizon. After some quality brainstorming and hours spent thinking, you, as much as I did, will find out that no matter your age or investment style, on average you are better off by looking at the big picture and allocating your money to your portfolio little by little over time. You will be wanting to look at the macro trends which, in reality, are easy to spot. Everything will go up in value in the long term.
You are here because you want to build your wealth. You can do it very easily and consistently, but you need to know these two things:
1) Save money over time, and
2) Invest what you save over time.
This is a golden practice as it forces you to make money by spreading out the risk of your investments. What does it mean over time you might be thinking? Over time means either monthly or quarterly, but please make sure you do it consistently.
Apply this strategy, and reap the rewards.
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