If You Follow the Herd, You Will Get Slaughtered.

During the turbulent times we have had and are experiencing there will be ‘experts’ telling you what is the best place for your money.  It could be gold, annuities, real estate or even a pyramid scheme…….. Whenever there is fear in the air someone has the answer for your investments.

Wall Street: Money Never Sleeps
Wall Street: Money Never Sleeps (Photo credit: Wikipedia)

This gives the Wall Street bullies their opportunity to sell you their ‘solution’.

Right now many Wall Street bullies are selling safety. It might be annuities or life insurance or bank sponsored CDs or on and on. These safe money products may look appealing and allow you to sleep at night for right now. However in the long run you will lose. You will lose purchasing power in the future.

That means your principal might be intact, however your cost of living exceeds your income.

Imagine yourself 10 or 20 or even 30 years from now and your cost of living has increased every year. But because you have invested in a safe money product your income is no longer able to support you and your family. Will you be able to go back to work? Do you want to go back to work? Do you trust the government to take care of you? Perhaps you believe your kids will help support you. Is this what you want?

The greatest wealth creation tool on the planet for the long term, remains…..you guessed it….equities.

However you need to work with a professional that understands the academic concepts that lead to successful investing over the long term.

Remember the most successful businesses have one strategy and they stick to it. Such as McDonald’s, if you visit a McDonald’s anywhere in the country they are all set up the same. They know there may be a better way to run a restaurant but their systems works.

Warren Buffet is another example, he has one way of investing and it has made him the most successful investor of our time. There are times when he losses more money than most but over the long term he wins. He does not fall for the latest fad nor fall for the fear messages.

As an investor you may be tempted to change your investment mix to accommodate current events. This is called market timing and it has been proven not to work. You may get lucky in the short term but you will eventually fail.

To succeed in investing for the long term you should

  • Own equities and high quality short term fixed income.
  • Globally diversify.
  • Rebalance.

The key is to remain disciplined to this strategy.

The ability to build your prudent portfolio and remain disciplined will require the help of an investor coach/fiduciary adviser. Because the Wall Street bullies will remain relentless in their quest to control your money and more importantly control your mind.

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