Investing is complex, but I ran across an article I saved that boils it down into some simple truths.
The article “12 Fundamental Truths of Investing” was published in 2001 by John Hancock Funds. While not exhaustive, these are good rules of thumb for all investors to consider.
12 Fundamental Truths of Investing
- Over the long term, stocks have had greater total returns than bonds.
- Over the long term, bonds have had greater total returns than money market funds.
- Over the short term, stocks have been much riskier than bonds.
- Over the short term, bonds have been much riskier than money market funds.
- You will make investments that go down immediately after you buy.
- You will sell investments that continue to go up after you are out.
- You will hold some investments too long.
- The value of the opportunities you miss will dramatically exceed those in which you participate.
- Someone, or some group of people, will always do better than you.
- You don’t pay a financial advisor for information - you are paying for the knowledge, wisdom and personal guidance.
- Accept uncertainty. All investment decisions are based on multiple guesses about the future. No one knows where the market will be next week, next month, or next year.
- Money can only be made in the future – it’s impossible to invest in past returns.
Following these investing “rules of thumb” can help you have greater stability in your financial planning. However, you may be facing into a difficult investing decision and want some guidance. I would be happy to give you financial advice to help you reach your investment goals.
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Michael V Young, CFP®