If I was to review my past writing I’m sure that I’d find that a reasonable proportion dealt with the highs and lows of investing in the share market.
There are several reasons for this. The main one is that the share market is a potential source of good returns for all investors - particularly if they get professional assistance and are able to take the long term view.
Unfortunately many investors seem unable to take the long term view.
I met someone recently who suggested that they were an aggressive investor. However to a question about whether they would be prepared to see the value of their investment decrease in value for a period of up to two years, as long as any losses were made up and a superior return was earned over the longer term.
The answer was given, “two years would be too long; perhaps two months”.
An investor who is prepared to see the value of their investment decrease for just two months can only be described as conservative. There is inherently nothing wrong with being conservative. There is no correct answer for every investor.
If an investor is making informed decisions about the type of investment strategy that is appropriate for them then whether that strategy is conservative, balanced or aggressive does not matter. The issues have been considered.
What does matter is, that having gained a good understanding of the pros and cons of different investment options, an informed choice can then be made.
Unfortunately many investors seem to make a decision based on an incorrect perception of what risk is, or a need to avoid the word altogether.
The risk they are concerned with seems to be the permanent loss of capital. The risk they are much more likely to be dealing with is volatility - entirely expected up and down movements in the value of an investment on the way to earning a solid longer term return.
That investment decision is important whatever age bracket you fit into.
For those who are nearing or have reached retirement the decision is still important. Uninformed investment decisions might see funds run out before the need does. That to me is real risk.
Being informed allows you to last the distance. Not being informed can lead to what appear to be safe choices - but the long term cost can be significant.
