Unfortunately, millions of people around the world have to invest despite having insufficient investment knowledge. Many who try to spend their lives free from financial risks now have to risk their chair days. The vast majority will find out if they are investors or gamblers when they retire.
Today, the stock market is on the agenda of the whole world. However, not only those who have knowledge are active in the stock market, but also many people who try to become investors but do not understand investment.
Since the vast majority of these people are currently working in a company or a government agency or are in the self-employed category, they are concerned about assurance by nature. Therefore, they want to work in a job that provides assurance or they want to acquire professions that provide assurance, even if they establish their own business, they care about having the control on them.
The reason why they want to switch to the “investor” category today is that they want to find “assurance” when they end their working life. Unfortunately, being an investor is not known for providing assurance. On the contrary, risk speaks here.
Since the distinguishing feature of these people who want to be investors is security, the stock market reacts according to their expectations. This is why you often hear “diversification”, “reputability” or “investment trust”…
Those who love guarantee often use the concept of diversification. Because diversification is an investment strategy determined “not to lose” but not “to earn” also. Successful or rich investors do not use diversification.
Let’s look at what Warren Buffett, perhaps the world’s best investor, said about diversification: “The strategy we have adopted is against the standard diversification rules. Therefore, most experts say this strategy is more risky than conservative investors pursued. We do not agree with this. We believe that the portfolio concentration policy will both reduce the risk that may arise and provide the comfort and business conditions that the investor seeks depending on the economic values that he expects before purchasing. “
In other words, focusing on portfolio concentrations or a few investments is a much better strategy than diversifying, according to Warren Buffett. Compared to diversification, concentration requires a person to be smarter and to take their thoughts and actions under more intense control. In his article, Buffett says that a mediocre investor avoids volatility because he thinks the ups and downs are risky.
Investors seeking assurance are interested in stocks of reputable companies. The company may be reputable, but things are very different with the stock market.
People who know little about investing prefer to hand their money over to a fund manager in the hope that they will use it better than they do. This is a smart way for those who do not intend to become professional investors. However, it does not mean that mutual funds are less risky. Frankly, when the stock market is upside down, we may experience a disaster similar to the Tulip Mania in the 1600s or the Great Bond Massacre we witnessed in the 1990s.
There are millions of people who love guarantees and want to be investors in the markets today. But due to the changing economy, investment doesn’t have much to do with assurance. Most people believe their retirement plans are safe, but not at all. An economic crisis can ruin everything. Things are not like they were in the past today.
Great Economic Turmoil at the Door
Such turmoil heralds the end of an age and the arrival of a new age. At the end of each age, some people cling to past values while others progress. I must say that those who give responsibility for their financial security to a large company or government will have a lot of difficulty in the coming years.
Nobody has a crystal ball. I follow major investors and most of their investment publications. Each say a different thing. Some say the near future looks bright, while others say the stock market crisis and a great depression are at the door. I listen to both views to look at the situation objectively, because they both have some merit. And those who are ready for bad days will reach wealth no matter what direction the economy takes.
We should be concerned about our long-term financial security and leave the responsibility for this neither to a company nor to the government. Conditions have changed since companies declared that they are no longer responsible for their employees’ retirement. Therefore, we all need to be awake investors and be aware of the ups and downs of financial markets.
My advice is to learn how to become an investor instead of handing over your money to someone else to invest on your behalf. If you invest your money in a mutual fund or give it to an investment professional, you may have to wait until the age of 65 to see the result. If they did a terrible job, you may need to continue working for the rest of your life. Millions of people will be faced with this reality because they will be too late to invest or learn to invest.
Would you like to continue reading? Check out these:
- THE DIFFERENCE BETWEEN A GOOD INVESTOR AND A BAD INVESTOR
- WHICH PATH ARE YOU MORE INCLINED TO? (EMPLOYEE, SELF-EMPLOYED, EMPLOYER OR INVESTOR)
- MAKE MONEY IN A BETTER WAY
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