How many of us really get this wisdom from Warren Buffet sunk deeply into our investing Mind and don't allow it to re-surface again?
3. Volatility is not risk (Warren Buffet)
Investors must tolerate far greater
volatility in stocks than in securities tied to U.S. currency. But it’s clear
that securities tied to the value of U.S. currency have presented truer risk to
one’s financial well-being over the past half-century.
If you need money for a home
purchase or to fund tuition payments over the next few years, then short-term
bonds and cash are required. Stocks’ volatility VIX, -1.34% makes them inappropriate for
short-term goals.
But if you have a long time frame
and can make regular investments, then the risk to your financial well-being is
in not owning stocks. So if you’re relatively young, and you’re contributing to
a 401(k), for example, you’ll do yourself a favor in old age by making
contributions to stocks now and periodically through your life.
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