I Hate Investing
And no, not because the last few weeks have been totally crazy in the stock market. But these past few weeks have just reminded me, again, of exactly what I hate about investing.
Investing, to me, has always seemed like a “lose if you do, lose if you don’t” proposition. I know this is because of my own risk-adverse nature, but sometimes it just seems there is no way to make the right choice.
If you do invest, you’re exposing yourself to risk. The more risky the investment, the more potential for return. The idea is touted that, over time, it always trends up, but you don’t really know that. It is a risk. A tricky risk that is kind of glossed over and not really talked about, until the market does crazy things and we all want to cry.
If you don’t invest - well, tell me how the average person will ever retire on an average 3% (or less) return? That’s not even inflation. So if I save 10% of my salary in safe things like a savings account, it would take me much more than 30 years to save enough money to retire unless I can save, I think, over half my salary. Which, I cannot do so well.
It all just seems so depressing to me at the moment. Honestly, it has felt depressing to me since the first day I ever invested, but I can trick myself into caring less when times are good. :) Is there even a right answer? I feel like there is no way for me to be fiscally responsible in this arena.
Ah life. Why do you not have a straightforward answer here like the “spend less than you earn” mantra? Getting of of debt is easy compared to thinking about this.
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October 9th, 2008 at 4:23 pm
Investing is only for the very long term for me. The way I handle my discomfort with the risk is by putting my 401k into a lifecycle fund. I let that do the thinking/adjusting for me. It bases my allocations and their associated risks based on how close to retirement I am. I know that I have many years until retirement (30+) so I am not stressing about what the market is doing right now at all. The shares I’m buying now will inevitably gain value overall eventually (barring the truly catastrophic). So what’s to worry about? And what’s all that worry going to accomplish? I’ll keep contributing to my 401k for the very long term and stay in “safety” of ING savings and CDs for shorter term saving.
October 9th, 2008 at 5:09 pm
Nice post - I think you just summed up 99% of the population with your frustrations. I’ve been actively investing for 10+ years now and this market is absolutely insane.
October 9th, 2008 at 5:25 pm
I hear that sister!
October 9th, 2008 at 5:46 pm
I am not big on investing either. I guess I’m not much of a risk taker!
October 9th, 2008 at 7:39 pm
It IS wrong that we have to take such a risk to have enough after inflation for retirement! What did people do before investing was such a big deal? I know my Dad was rather unusual in his commitment to investing, but he ended up with a very nice retirement. I think most of his peers lived off Social Security/Medicare –many who had not even contributed to the system for some portion of their careers. Many also had pensions from jobs they held for thirty plus years.
It’s a sad state of affairs, and I don’t know what the answer is. Obviously forcing workers to invest their Social Security in the stock market isn’t such a great idea! I belong to the generation of folks for whom investment vehicles have come very late in their work careers, and whom do not have large sums to make up for “lost time”, but who are also victims of diminishing or nonexistent pension plans.
It all reflects a fundamental change in philosophy and work ethic in this country. Oh well.
October 9th, 2008 at 7:41 pm
The trick to investing is to do it smart. To look at the economic signals and pull out when necessary.
October 9th, 2008 at 10:25 pm
You should pick up a copy of A Random Walk Down Wall Street by Burton Malkiel to help you understand “risk”. The risk here is not that you’re going to lose your money, because you’re not. The risk is that you will invest too riskily for your time horizon. Putting money in the stock market that you need in anything less than 10 years is not such a hot idea. Putting money in the stock market that you’ll need in 30 years is a great idea. The US Stock Market has never returned a negative value for a 25 year time horizon.
You’re doing the right thing. You’re doing the right thing. You’re doing the right thing.
October 9th, 2008 at 11:09 pm
You can always start your own business. Investing in yourself = smart
October 9th, 2008 at 11:49 pm
You just put your finger on the reason Social Security should NOT be privatized. I’m watching all my savings disappear as we sit here–amid rumors that I will be laid off 19 months from a retirement that is now not to be. At least if everything I’ve saved is gone, I’ll get $1019 a month. That’ll go a long way, eh?
Just think of the riches I’d have if all my FICA contributions had gone into the stock market.
October 10th, 2008 at 8:17 am
One thing you might try instead of a savings account or investing (although yes, sadly investing seems to be a must at some point in the process) is how I started out my RRSP (401K) portfolio - the GIC “ladder” system. (CDs in the States). CDs tend to have at least a *little* higher rate of interest than the high-interest savings accounts especially if you invest for about 5 years. If you buy one annually, in five years you can take what you’ve made from the first one and reinvest it in either another CD or in the market if you’re more comfortable by that point. It’s a *better* system at the other end of things - a way to ensure you have constant income once you’ve retired, but it helped me feel like I wasn’t getting too behind while I dithered about how I wanted to enter the market.
October 10th, 2008 at 6:52 pm
That’s interesting. Can anyone in the US get CDs in a 401(k) or 493(b)? I don’t think that’s an option at my employer. At GDU, the best you can do by way of limiting risk is invest in a money market mutual fund…which won’t get you far.
November 6th, 2008 at 1:49 pm
In every market including this one there ARE buys. Some nobrainers are: FIX–which has $1B in cash on its balance sheet; SNDK which should see another take out offer from Samsung; and believe it or not SANM, whose chairman just bought 600,000 shares.