Does this question sound familiar? Bet it does. This is probably one of the most popular questions asked in any investor meet or television show.
In academic circles we have a saying. ‘No question is silly. However, some answers can be’.
So assuming we believe in this saying, is titular question silly or stupid? NO
So what is the answer?
The rules of investing and therefore the answer to this question is independent of current market conditions
- Meaningful Investing requires:
- a goal and a time frame
- a knowledge of different kind of risks
- an understanding that exposure to a different asset classes (stocks, bonds, gold etc.) will reduce portfolio volatility
- diversification within an asset class
- there is a couple of more things like rebalancing. However, this should do quite well for a start.
End of answer.
If investors do not understand this answer, they have two choices and only two choices:
- Learn. It will take a little bit of time and consistent effort.
- Get professional help. Consult a good financial planner. The fee that you pay will be worth it. You can choose to remain ignorant, provided you trust the planner and implement his/her advice.
Do you agree that the reaction to this answer will be unsurprisingly indifferent?
- I ask you, ‘how to run a marathon?’
- You tell me, ‘you need to train for many months. Starting with short distances and then gradually increasing the distance’.
- To this I say, ‘that is fine. Just tell me how to run a marathon?’
- How would you react?
- Understanding Volatility of Investment Returns with a Portfolio Rebalancing Simulator
- The Permanent Portfolio: A Fascinating Low-Volatility Option For The Long Term Indian Investor?
- Investors Cannot Eat Their Cake And Have It Too!
Subscribe and join the freefincal Youtube community!
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via: Feedburner
- We are also on Google PlusandPinterest
Do check out my books
Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner
The ultimate guide to travel by Pranav SuryaThis is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)
Free Apps for your Android PhoneAll calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)