I invest money into things that I know will make me happy, like music, jewelry, and art. Investing in things that I know I’ll care about, I think, is an investment of my time and energy. I don’t do it because I want the money and am concerned about how I’ll feel once it’s gone.
Investing in stocks, bonds, and real estate is a very different story. You really have to be invested in the company that you are purchasing the assets for. You have to have some kind of investment in the company, and you have to be invested in the company. What does it mean to be invested? Well, it’s all about your perception. You have to like the company you are purchasing the assets for.
If you’re invested in the company you are investing in, then you should be concerned about how ill you’ll feel once the stock or bond goes down. That’s because investing in a company that you think will not be around for the long term is like jumping into the deep end when you are only a few feet away. You might know that you won’t have the money to get back to shore, but the thought of that fills you with dread.
The stock market is like a huge stock swimming pool with millions and millions of dollars in it. Anyone swimming in it is going to have to be careful that they don’t get pulled out by a shark, because sharks are all about not being pulled out by a shark.
I’m not saying you should invest that money on something like a car, but if you can do it, then you should invest it on something like a boat, because boats are all about not being able to swim in the ocean that way.
Investing is like swimming in a huge stock pool, and it’s not always pretty. If you’re a savvy investor, you know that if you’re not careful you can lose a lot of money in these pools. For the vast majority of people, it’s a game of “if I can’t get out, I’ll put in more than I can get out.
Investing in a boat or in a home or in the stock market has its challenges. One of the biggest challenges about investing is that it is very easy to do wrong. To oversimplify, when you invest, you expect that the stock market will go up, but you also expect that the market will go down and the value of your stock will fall.
Although it’s easy to overstate how much it’ll go down and how much it’ll go up, over the long run, the average investor’s returns on investment can be very different from the returns on the stock market. In a nutshell, the average investor buys stocks with a small amount of risk (the stock market as a whole) and then sells stocks with a greater risk (the individual stocks in their portfolio).
Not only that, but the average stock investor is usually the one who buys and sells stocks with the most risk, i.e. the stocks that are most likely to go down, and then sells the stocks with the fewest possible loss. While this may seem like a trivial point to make, it’s very important to the average investor as it makes it possible to buy and sell stocks with a wide range of possible outcomes in a very short period of time.