The vast majority of the investment advice you get, whether from professional bankers or dubious YouTube influencers, is based on hindsight - look, the investment product I sold made so much money in the last X months! This argument is misleading, and therefore the SEC actually requires funds to write in their prospectuses that past performance does not indicate future performance. In fact, the opposite is often the case: if an asset class has shown impressive growth over the past X months, it is becoming more and more likely that it will experience a " correction " or even a real collapse. So when deciding whether to invest in stocks, look at Schiller's price-to-earnings ratio . It currently stands at 38.7 versus a long-term average of 16; It was not higher until shortly before the dot-com crash. If you invest in equities or an equity fund right now, a correction or collapse will most likely occur somewhere within the next 12 months and you will lose most of your investment.
So why would a friendly banker tell me to invest now? Do not know the price / earnings ratio? Well, it turns out that the banker has a conflict of interest. Since the bank pays for this, its main purpose is to make sure the bank makes money, and not me. And the money in my savings account does not bring much money into my bank. When I buy their investment products, my bank receives the standard mutual fund fee . These fees are completely independent of the performance of the investment product. In other words, the risk (the presence of which had to be indicated by law) is entirely at my expense. When I buy an investment product from them and lose my shirt, my bank always makes the same money. Advise me to invest without risk for my bank, but certainly not for me.
So what about other investment options? Buy stink memes on RobinHood? Buy cryptocurrency? Well, I'm not saying you should never do that. But you have to understand that it is not about investing. My personal gaming experience is positive: I won $ 700 in the week of my life I spent in Las Vegas. But I pre-determined how much I was willing to lose, and set aside a $ 1,000 pool for it. I will stop playing if I lose, but luckily I managed to win. Fun but not reliable investment advice. The stems themselves, cryptocurrencies, collectibles, or whatever you heard on the internet were a definite way to get rich quick. You can make money, but it is far from mandatory, and most of these products can easily lose much more than a balanced stock portfolio in the event of a stock market crash. This is not the right investment product for my retirement plan. Feel free to set aside any money you can afford to lose and play with it, but nothing more!
Sometimes the best investment advice you can get is not to invest now. When you open the newspaper and read an article about a terrible stock market crash, it's probably time to invest. In addition, sooner or later, as inflation rises, bond yields will rise. The era of ultra-low inflation and ultra-low interest rates is a historical anomaly and cannot last forever. And while investing in home ownership can be risky for speculative reasons, investing in a home in which you plan to live for many years is relatively safe as long as you do not incur too much mortgage debt. I intend to do so and ignore the kind letter from my bank.
