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Back about a year ago when the sky was falling, I strongly considered purchasing a stock. Like most stocks at the time, this one was in a freefall. However, I knew the world wasn’t ending and this stock satisfied each of my requirements. It is in a demand industry, it has a strong management team, and it had fallen out of favor (along with everything else) giving it a great price. Unfortunately, I chickened out and remained on the sidelines. Well, you know what happened next; the stock is currently 135% higher and still climbing.
This is just one instance of letting fear take control and allowing inaction to rule. The results were obviously not what one wants. However, that is what many individuals do every day, particularly when the market dips, or in this case crashes. Luckily, I learned a valuable lesson and will not make the same mistake again.
People point to the recent crisis as justification for keeping their money in the bank where it is safe. What they fail to recognize is that is the only way to guarantee they will lose money over time. They somehow deny the realization that is inflation.
Others complain investing is too risky and they can’t afford to lose money. I don’t know anybody who hasn’t lost on an investment at some point. Even the greats like Buffett make mistakes. That risk should be understood, especially when investing in stocks.
Nevertheless, it’s imperative to stick with it. Now, I’m not advocating buying stocks for the sake of buying, or that stocks are the best way for someone in particular to invest their money. Develop a plan that gives you the greatest opportunity to achieve your goals and follow through with it. Otherwise, you will certainly suffer the consequences of the greater and nearly guaranteed risk of inflation. Stuffing your money in your mattress is the surest way to lose it in the end.
