{"id":7018,"date":"2013-10-02T15:40:35","date_gmt":"2013-10-02T22:40:35","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7018"},"modified":"2016-12-21T07:28:22","modified_gmt":"2016-12-21T15:28:22","slug":"how-to-invest-when-everything-seems-risky","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/how-to-invest-when-everything-seems-risky\/","title":{"rendered":"How To Invest When Everything Seems Risky"},"content":{"rendered":"

There are two fundamental struggles for retirement investors:\u00a0Saving<\/a>\u00a0enough, and investing well. How to invest your money should be a fairly easy decision, but many investors get stuck.<\/p>\n

Why? Because it always feels like the wrong time.<\/p>\n

Cash builds up in a retirement account and balances grow, but the markets are moving too fast. If they are rising, it feels wrong to invest. Better to wait until prices fall.<\/p>\n

\"how<\/a><\/p>\n

If the markets are falling, it feels worse, since who wants to take the ride down? Better to wait till things bottom.<\/p>\n

When markets rise and fall, well, that’s the worst of all. Volatile markets feel directionless, uncontrolled. We fear them and stay away.<\/p>\n

The answer to this problem, simply put, is just to invest. But there are mental tricks to help you learn how to invest in a safe, judicious manner.<\/p>\n

1. Ignore the news.<\/strong>\u00a0By far the biggest driver of investor nervousness is watching TV cable channels dedicated to the stock markets. Some people probably should be watching these channels, and most of them either work on\u00a0Wall Street\u00a0or otherwise have a stake in\u00a0active investing<\/a>. If you are a long-term retirement investor, the day-to-day is meaningless. Worse, it’s actually dangerous.<\/p>\n

2. Own the market.<\/strong>\u00a0Everybody’s uncle’s cousin’s friend’s dad has a great stock for you to buy. Passing on stock tips is a form of self-validation for the passer and a source of\u00a0risk\u00a0<\/a>for the passee. If it’s a lightly traded stock, whatever information you might get is almost certainly past is due date in terms of usefulness. If it’s a big stock, your inside source knows nothing of value anyway. Instead of picking stocks, own the market via\u00a0index funds<\/a>.<\/p>\n

3. Build a portfolio.<\/strong>\u00a0The single largest factor in setting your level of risk and return is the composition of your\u00a0investment portfolio<\/a>. A stock-heavy portfolio will generate more volatility but ultimately provide a larger long-term return. Lower the stock holdings and your volatility declines. Trying to time the market, owning only certain classes at certain times and cash the rest of the time, is a very high-risk approach.<\/p>\n

4. Buy and sell infrequently.<\/strong>\u00a0Investors are generally too active. Your holdings should be measured in months and years, not days or weeks. A portfolio approach will help you understand when one asset class is outpacing the rest and should be sold down to generate\u00a0cash<\/a>. That cash, however, should be quickly reinvested in the laggards. Otherwise, do nothing.<\/p>\n

5. Rebalance.<\/strong>\u00a0This is the key to capturing all those potential gains while they’re available, rather than letting them stay potential so long that the opportunity expires. Be disciplined about\u00a0rebalancing<\/a>\u00a0and you cannot help but generate a solid performance.<\/p>\n","protected":false},"excerpt":{"rendered":"

There are two fundamental struggles for retirement investors:\u00a0Saving\u00a0enough, and investing well. How to invest your money should be a fairly easy decision, but many investors get stuck. Why? Because it … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7019,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[3],"tags":[43,37],"yoast_head":"\nHow To Invest When Everything Seems Risky | MarketRiders.com<\/title>\n<meta name=\"description\" content=\"How to invest your money should be a fairly easy decision, but many investors get stuck. Why? 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