Don’t Invest in the Stock Market
talk, telling me that he was getting some stock certificates that he hadn’t accessed in years. He was going to sell his stock. He was an older gentleman, probably in his early seventies. He then proceeded to tell me that he lost so much money in the stock market that he’d advise people to never invest in the stock market. I made the remark that everyone tells me that I’m young, so I shouldn’t worry about the volatility of the stock market because I’ve got a long time to weather the ups and downs.
He told me at one point he had been making $14,000 a month from the stock market alone. He didn’t disclose how much money he invested, but that was his gain monthly from investing in the stock market. Crazy. I can’t even imagine earning $14,000 a month without having to do any work to earn it.
In 2001 after the 9-11 attacks on the World Trade Center, he lost 50% of his investment value. Instead of cashing it out, he decided to hold onto it and see exactly how long it would take for the value to come back. Finally this year he’s caught up and the value of his investments is now equal to what it was ten years ago. Ten years!
Investing in the stock market has always scared me. I don’t like the feeling of being vulnerable. I do have a Roth IRA that is invested in mutual funds, and part of my 401k through work is also invested in different bonds, money market funds, and stocks. I’ve got a pretty good investment mix, so it’s not like I’ve got all my eggs in one basket.
I feel safer when I invest any extra money into a savings account. The money is liquid and if I ever need it, I have access to it. With a money market or regular savings account, I earn interest and my principal is protected. I’m guaranteed I’m not going to lose money in our savings account. Granted, the interest rate probably isn’t as high as the rate of inflation, but that’s okay.
One of the most important things about personal finance and money is that you’ve got to do whatever makes you feel safe personally. If you are comfortable with carrying a responsible amount of debt, that’s fine. If you choose to do without some things in order to avoid debt, that’s your choice. You’ve got to do whatever makes you happy. I try my hardest to find a happy balance between being frugal and living life. It’s not always easy, but I figure that everything will work out in the end, so I shouldn’t stress too much about it. Easier said than done.
How do you feel about investing in the stock market? Does it make you nervous, or do you love investing?