Do you think the stock market is still a good investment?
(I have been reading about the current bear market and how far the stock market has crashed recently. I also read that if someone would have put an equal amount of money in a CD (Certificate of Deposit) and a index fund matching the Dow Jones Industrials ten years ago, the safe bank CD deposit would have done better!
I put all my money in safe bank accounts a few months ago and sleep better but my friends tell me that my money should be in the stock market!)
Answer:
Like anything else in life when one goes to extremes they’re wrong. You sound alot like my wife who is in full out panic mode and wants to pull all of our $$$ out because the mkt is tanking. I reminded her that by AVERAGING our way into our investments OVER TIME we are actually still ahead. I also reminded her that our various funds have steadily paid us DIVIDENDS and CAPITAL gains as insurance against such catastrophic losses (ONLY INCURRED WHEN YOU SELL). Finally, I can sleep at night knowing that I’ve some in MMF (Money Market Fund) and am still averaging my way into the DIVIDEND & CAPITAL GAIN generating funds I’ve had for many, many years. In fact I think I may/might increase my monthly investments just now because OVER TIME I know that the investment will only benefit. Finally…having all your eggs in one basket will only get you a few eggs…taking a risk or two and diversifying won’t hurt. Try averaging some $$$ into First Eagle Global while it’s open…or T Rowe Price New Era Fund…you’ll sleep just fine regardless of the market joculations knowing that if you TAKE YOUR TIME and invest consistently you’ll be ahead in the end…Set a realistic time horizion say 15-20 years…Also keep an eye on what you put the $$$ in because when the bull mkt in commodities ends you wouldn’t want to be in New Era…GOOD LUCK!
Posted: July 29th, 2010 under US Stock Market.
Tags: a good investment