Is It Worth Taking Risk When It Comes to Investing For Retirement?
When you’re in your 20s, you have many things on your mind other than retirement. But that doesn’t make retirement planning any less important. You need a comfortable lifestyle after you quit the 9-5, right? So why not get on board with making your 60s the best years of your life ASAP? ‘Coz any of your fantasies aren’t going to matter if you’re not financially stable by then.
But we understand that managing round the clock work schedules, timely savings, and retirement planning at once can be challenging. And that’s why we’re here to help!
Investing in stocks is an option that you can take to accumulate wealth comfortably. But are you new to the field? Don’t worry. Today we’ll clear all your misconceptions around investments and hopefully help you make good money decisions.
Reward or risk
Before you get into an investment, you must know how conservative or aggressive your strategy should be. We know your savings matter to you, and your natural instincts will push you to be conservative. But trust us, this has proven to be a huge mistake for most. If you opt to invest conservatively, it’s pretty obvious that you’ll choose bonds and turn your back at stocks.
There will be times when the stock market will be volatile, leading you to throw all your money anywhere but stocks. But before you do that, you must know that there’s a higher return rate in stock than in bonds.
Over the centuries, stocks have proven to yield an average return of 10 percent per year. On the other hand, with government bonds the returns are likely to be only 5 to 6 percent per year. You may not find any considerable difference between 10 percent and 5 percent return rate, but trust us, that difference will turn into almost 1.5 million dollars by the time you retire!
One of the primary reasons why investors don’t want any part in aggressive investment is because they fear that someday the market will crash and destroy their life savings. And we know we just told you that investing conservatively isn’t the best idea, it really depends on where you are in your life.
If you’ve hit your 60s, you should be saving in a conservative strategy. There’s not much time for your money to recover from the market downturn. But now you’re nowhere near that mark. Hence the market crashing won’t be your worst nightmare. Your savings may take a hit in the short term, but you’ll get ample profit in the long run.
To sum it up
Although stocks are a risky bet when compared to bonds, they have a tremendous growth rate. By staying away from stocks you may think you’ll reduce the risk factor, but you should know that won’t get anywhere near an extra million dollars if you keep playing it safe!
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