The Finance Pig

Being in finance, I often field a lot of questions about the various markets.  One of the most repetitive questions I’ve heard is, “what happens of the stocks keep going down?”

Well there are various answers to this.  When you enter the market, you often answer questions about how conservative or aggressive you want to be.  If you are conservative in nature, then you may want to cash out and minimize your loss, but the wise investor knows this isn’t the best action.  Cashing out now will minimize your current loss.  It will stop your value from going down further and you can choose to do something else with your money.  The problem is that the values will go back up.  It most likely will take 1-3 years to fully bounce back, but it most assuredly will happen.

There is a really great statement used for investing, if you need the money within the next 5 years, then the stock market is probably not for you.  A person came to me a few months ago saying that she had $5,000 and she needed $15,000.  She wanted to know how to invest quickly to get to that amount within 6 months.  If anybody knew the answer to that, they’d be a mega-millionaire just by selling that secret alone.  EVERYONE wants to get the most amount of return in the shortest amount of time.  Truth is that it can’t be done.  Not without gambling and risking the entire amount that you are investing.  I’m sure people have done it, but if they tried to do it again, they’d fail.  If they tried it again 100 times, they’d fail.

Another question I get is they want to start an on-line business with no start-up capital, only takes a minimal amount of time, and can replace their entire income so they can only work part-time from now on.  Yeah, well I love pigs and even if I super-glued their wings on, I’d never throw it out a window and ask it to fly.  Starting a company takes more time then working a normal job.  You end up living the job and must bootstrap for a period of time just to get by.  You often have to give up benefits, vacation, and your 401K until the company really takes off and can sustain that extra expense.  Even if you happen to have a fantastic idea, the work you need to do to get started is like working two jobs.

Also, never take shortcuts!!  Just seeing the amount of foreclosure, job losses, portfolio declines, lay-offs, etc. should be enough to get you really interested in how to become secure in your finances.  Adjustable rate mortgages, not diversifying your portfolio, and not saving money are just a few of the many mistakes we need to learn from.

Nobody is perfect, and even the best financiers in the country doesn’t make every right decision.  But making the correct choices in what you can control and starting from the bottom can be the best decision you’ve made.   Quick money making schemes, get rich quick decision making, and living outside your means are all factors that have put the country in the current financial crisis.  Learning from our mistakes won’t correct our wrongs, but can protect yourself from being a part of it.