The One Investment Truth That Never Changes

bee

The biggest risk to your money isn’t a bear market, rising interest rates, the Federal Reserve, inflation, high fee mutual funds, war, famine, or any other imaginable event. It’s You.

fmdcapital.com/one-investment-truth-never-changes/

Mark

Tell me about it.

Ted

@bee: Thanks, good read !
Regards,
Ted

hank

Recent biggest risk?

I'd say it's a combination of me and super-low interest rates. Too much in cash and short term stuff. Waiting ... waiting ... waiting for a correction that never seems to come ...

Maybe there will never be another?

Tony

I liked the cartoon.

Desota

Excellent, thank you for posting the link.

MikeM

Learn to understand this flaw in our wiring. The knowledge that you can control your emotional responses and behavioral choices is a huge advantage over the course of your life.

Put some serious thought into this one. I guarantee it will be worth your while.

Thanks bee, that closing statement' wraps it up for me. I see this so much in the "what are you buying, selling, pondering post here on MFO. Love the post and opinions, but if you are using your core nest egg on that post you are exactly what the article describes.

Charles

Yes. I see it too.

But its easier to see than do something about.

"However, you must pick an investment routine or manager that you identify with and stick with that process through thick and thin."

Reminds me a bit of ...

"...to have and to hold, from this day forward, for better, for worse, for richer, for poorer, in sickness and in health, until death do us part."

BenWP

But, @Charles, what is the ideal Expense Ratio for a good marriage? Maybe a Wrap Fee would be the more appropriate term...

bee

@BenWP & @Charles...Don't forget surrender fees.

MJG

Hi Guys,

Fortunately, I have never been a victim of the fear cycle displayed in the reference article. Responding to the elements shown in that cycle will almost surely depress any market rewards.

Here is a Link to an article that appeared in The Balance investment website that addresses fears when investing.

https://www.thebalance.com/8-steps-to-overcome-investment-fear-4101564

The articles 8 steps to arrest fears seem plausible and reasonable, but seem complex.

I have a simplistic and more effective way to avoid the pitfall of overreaction. I simply isolate myself from the potential short term ups-and-downs by just not paying attention. I don't know and do not care how the marketplace is behaving or what it is delivering today. The same will be true tomorrow.

What permits me to be so cavalier about the current performance is that I'm really, not just saying, that I'm a long, long term investor. I will not need the monies I put at investment risk for at least 4 or 5 years. I will easily be able to survive down cycles that have been historically registered. That's great comfort, and permits me to practice my laissez-faire attitude.

Having adequate reserves is a winning strategy in both war and when investing.

Hopefully, many other MFOers are in a similar position.

ADDED REFERENCE:

After submitting, I came across the following related article:

http://www.collaborativefund.com/blog/bad-experiences/

Enjoy. I especially liked its concluding observation: " ...... individual investors’ willingness to bear financial risk depends on personal history.” Indeed, our personal experiences are a major factor in establishing our willingness to expose ourselves to risk of any nature.

Best Wishes