Living With Uncertainty - Practicing Patience
If you’re investing in the stock market or another money market, you need to be comfortable with uncertainty, but even more important, you have to be willing to wait. While some day traders maketheir money on small fluctuations within the market, the majority of individuals will spend months or even years holding the same stocks. This approach sets you up for the greatest gains and allows you to apply your long-term understanding of financial trends. In the long game, you’re in control.
Everything Is A Risk
One of the first mantras you should embrace when investing is that everything is a risk. It’s risky to put money into a stock, but it’s also risky to take it out – what if it spikes in a few days and you miss out on a fortune? This is one key reason to focus on balance and diversification when building a stock portfolio: you simply have less to lose if your stocks aren’t all tied up in a single industry.
Long Investments Enhance Your Options
Another benefit of taking the long view of investment is that it opens up additional options in terms of how you invest your funds. When you’re investing in the short-term, you typically can only invest in stocks; with longer investments – and a higher minimum investment – you’ll have access to money market deposit accounts (MMDAs), which typically trade in liquid securities. These accounts limit how often you can make withdrawals, but they’re also insured and managed by banking institutions.
Ultimately, when you invest over longer periods of time, you have the opportunity to master market trends and gain a valuable skill, reading investor reports, monitoring market fluctuations, and developing a sense of how different investment properties correlate. By entering into the investment process with the goal of understanding why stock prices change rather than only focusing on making money, you’ll earn more and make smarter decisions about when, and what, to buy and sell. Investing isn’t just about the money you have right now, but how you can transform your assets for maximum lifetime value.